International Trade Law News

Published by Jacobson Burton Kelley PLLC

Yesterday, the U.S. Department of State announced that the U.S. will impose sanctions on Belarusneft, a state-owned Belarusian energy company, under the Iran Sanctions Act (ISA) of 1996 as amended by the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010, for its involvement in the Iranian petroleum sector. According to the State Department, Belarusneft entered into a $500 million contract with the NaftIran Intertrade Company in 2007 for the development of the Jofeir oilfield in Iran.

The sanctions that will be imposed on Belarusneft include:

1. Denial of U.S. Export-Import Bank assistance in approving, guaranteeing, insuring, extending credit, or participating in the extension of credit regarding the export of any goods or services to Belarusneft;

2. Denial of U.S. government licenses or other approvals required to export or reexport goods or services to Belarusneft;

3. Prohibition of loans or credits to Belarusneft by U.S. financial institution totaling more than $10 million in any twelve-month period, unless the loans or credits are provided to relieve human suffering; and

4. Prohibition on the U.S. Government procuring, or entering into any contract for the procurement of, any goods or services from Belarusneft.

Because Belarusneft is a subsidiary of Belneftekhim and was already to subject to OFAC sanctions, the sanctions imposed under the ISA and CISADA are not likely to impact most U.S. companies. However, as a State Department spokesman indicated, this announcement "sends a message to our partners in Europe as well that this is a company that we've decided to sanction. And I'm sure they have access or would seek access into European markets." 

Because several members of Congress have expressed concern over the Obama Administration's implementation of CISADA, the State Department is likely to announce further Iran-related sanctions in the coming months.

For example, in response to the State Department's announcement Representative Ileana Ros-Lehtinen (R-FL), Chair of the House Foreign Affairs Committee, said that that "the conspicuous absence of any sanctions on Russian and Chinese companies, despite their longstanding involvement in Iran, is deeply troubling." She also noted that in addition "to going after the low-hanging fruit like Belarusneft, the State Department must impose sanctions against energy giants that continue to do business with Iran.”

Labels: Sanctions; Iran, State Department

Miscellaneous Tariff Bill - The House of Representatives is expected to consider the Miscellaneous Tariff Bill (now known as the U.S. Manufacturing Enhancement Act) (HR 4380) today. The bill will be considered under the suspension of the rules provision, which means that the bill may not be amended and requires a two-thirds vote for passage. The National Association of Manufacturers has sent a Key Vote letter to House members urging passage of the bill.

AM Update: After 40 minutes of debate this morning, the final vote on HR 4380 was postponed due to request for recorded vote. Under the suspension rules, any request for the yeas and nays results in a postponement of the final vote.

PM Update: In a surprise move the House passed the Miscellaneous Tariff Bill (HR 4380) this afternoon by a vote of 378 to 43. AP story here. NAM statement on passage here.

Iran Sanctions - The Washington Post reports that Iran's ability to ship vital goods has been significantly curtailed due to the insurance and other sanctions contained in the recently enacted Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) of 2010 (H.R. 2194).

North Korea Sanctions - While no details have been released, Secretary Gates and Secretary Clinton announced today that the U.S. will impose additional sanctions on North Korea. The sanctions are likely aimed at disrupting North Korea's weapons and contraband trade and targeting the finances of the Pyongyang regime.

Update: The State Department announced that the additional sanctions will include:

• Further State and Treasury designations of North Korean entities and individuals supporting proliferation, subjecting them to an asset freeze; 
• New efforts with key governments to stop North Korean trading companies engaged in illicit activities from operating in those countries and prevent their banks from facilitating these companies’ illicit transactions; 
• Expanding cooperation to prevent the travel of individuals designated under the Security Council resolutions, as well as other key North Korea proliferators; 
• Greater emphasis on North Korea’s repeated abuse of its diplomatic privileges in order to engage in activities banned by the Security Council, and expanding cooperation with countries so that they will not choose to purchase banned items from North Korea or to sell North Korea proliferation-related goods.

Export Controls/Diversion Hearing - The House Foreign Affairs Committee's Subcommittee on Terrorism, Nonproliferation and Trade will hold a hearing tomorrow on "Transshipment and Diversion: Are U.S. Trading Partners Doing Enough to Prevent the Spread of Dangerous Technologies?"  The witnesses include Assistant Secretary for Export Administration Kevin Wolf and Vann H. Van Diepen, Acting Assistant Secretary at the State Department's Bureau of International Security and Nonproliferation.
  
Foreign Manufacturers Legal Accountability Act of 2010 - The House Committee on Energy and Commerce reported favorably an amended version of H.R. 4678 by a vote of 31 to 22. The bill requires foreign manufacturers of certain products imported into the U.S. to establish registered agents to accept service of process. While the amendments passed today addressed a number of industry concerns with the bill, the bill is likely to be opposed by a number of trade associations. The full text of the amended version of the bill can be found here.

Conflict Minerals Disclosure and Certification - Section 1502 of the the financial reform bill (H.R. 4173) signed into law by President Obama today included a provision aimed at trying to reduce the use of conflict minerals mined in the Democratic Republic of the Congo. The provision states that the SEC must issue regulations requiring publicly traded companies to disclose annually whether conflict minerals are necessary to the functionality or production of their product and to certify that the measures taken by the company to verify the source of those minerals is not the Democratic Republic of the Congo or adjoining countries. The provision defines "conflict minerals" as columbite-tantalite (coltan), cassiterite, gold, wolframite, or their derivatives. This provision will impact a wide range of publicly traded manufacturing companies, including those using Congolese tantulum to produce electronics products, and those using tin and gold.

Labels: North Korea, Sanctions; Iran, State Department

As a result of this week's ousting of the President of Kyrgyzstan by the opposition, the State Department's Directorate of Defense Trade Controls (DDTC) today issued the following announcement regarding delays in license applications for the export of ITAR-controlled items to Kyrgyzstan:

In response to recent events in the Kyrgyz Republic (Kyrgyzstan), DDTC wishes to inform exporters that although there is no current U.S. or UN arms embargo on Kyrgyzstan, the final decision of license applications for the export of U.S. Munitions List (USML) items to Kyrgyzstan 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 Kyrgyzstan, that the license application provide detailed information on the end-use and end-user of the USML items.

The PDF version of the DDTC's announcement, which also includes the text of the White House statement on Kyrgyzstan, can be found here.

Labels: ITAR, State Department

The U.S. Department of State today designated two entities in North Korea under Executive Order 13382, which authorizes the blocking of property of persons engaged in proliferation activities and their support networks.

The following is a brief a summary of these entities:

• General Bureau of Atomic Energy (GBAE) -- located in Pyongyang, oversees the North Korean government's nuclear program and manages operations at the Yongbyon Nuclear Research Center.

• Korea Tangun Trading Corporation -- also located in Pyongyang, is subordinate to North Korea’s Second Academy of Natural Sciences and is primarily responsible for the procurement of commodities and technologies to support North Korea’s defense research and development programs and procurement, including materials that are controlled under the Missile Technology Control Regime or the Australia Group.

The two entities designated were also designated by the United Nations in July 2009 for their involvement in North Korea’s WMD and missile programs.

As a result of today's designations, these two entities have been added to OFAC's SDN List, assets of these entities that are within U.S. jurisdiction must be blocked and U.S. persons are prohibited from conducting any transactions with these entities.

Labels: North Korea, OFAC, State Department

On January 5, 2006, the State Department published a notice in the Federal Register announcing that the U.S. has imposed sanctions on 24 foreign entities pursuant to the Iran and Syria Nonproliferation Act. The Iran and Syria Nonproliferation Act (P.L. 109-112) provides for the imposition of penalties on entities and individuals that transfer to Iran or Syria equipment and technology controlled under multilateral export control lists or otherwise having the potential to make a material contribution to the development of weapons of mass destruction (WMD) or cruise or ballistic missile systems.

The list, which is reprinted below, includes four Russian companies and others in China, Iran, Iraq, Malaysia, Mexico, North Korea, Sudan and Syria:

1. China National Electronic Import-Export Company (CEIEC) (China) and any successor, sub-unit, or subsidiary thereof;
2. China National Aero-Technology Import and Export Company (CATIC) (China) and any successor, sub-unit, or subsidiary thereof;
3. Zibo Chemet Equipment Company (China) and any successor, sub-unit, or subsidiary thereof;
4. Defense Industries Organization (DIO) (Iran) and any successor, sub-unit, or subsidiary thereof;
5. Iran Electronics Industries (IEI) (Iran) and any successor, sub-unit, or subsidiary thereof;
6. Sanam Industrial Group (SIG) (Iran) and any successor, sub-unit, or subsidiary thereof;
7. NAB Export Company (Iran) and any successor, sub-unit, or subsidiary thereof;
8. Abu Hamadi (Iraq) and any successor, sub-unit, or subsidiary thereof;
9. Kal Al-Zuhiry (Iraq);
10. Korea Mining Development Corporation (KOMID) (North Korea) and any successor, sub-unit, or subsidiary thereof;
11. Target Airfreight (Malaysia) and any successor, sub-unit, or subsidiary thereof;
12. Aerospace Logistics Services (Mexico) and any successor, sub-unit, or subsidiary thereof;
13. Arif Durrani (Pakistan);
14. Rosoboronexport (Russia) and any successor, sub-unit, or subsidiary thereof;
15. Kolomna Design Bureau of Machine-Building (KBM) (Russia) and any successor, sub-unit, or subsidiary thereof;
16. Tula Design Bureau of Instrument Building (KBP) (Russia) and any successor, sub-unit, or subsidiary thereof;
17. Alexey Safonov (Russia);
18. Al Zarga Optical and Electronics Co. (Sudan) and any successor, sub-unit, or subsidiary thereof;
19. Giad Industrial Complex (Sudan) and any successor, sub-unit, or subsidiary thereof;
20. Yarmouk Industrial Complex (Sudan) and any successor, sub-unit, or subsidiary thereof;
21. Army Supply Bureau (Syria) and any successor, sub-unit, or subsidiary thereof;
22. Industrial Establishment of Defense (IED) (Syria) and any successor, sub-unit, or subsidiary thereof;
23. Ministry of Defense (Syria) and any successor, sub-unit, or subsidiary thereof; and
24. Scientific Studies and Research Center (SSRC) (Syria) and any successor, sub-unit, or subsidiary thereof.

These sanctions have the following effect: (1) no department or agency of the U.S. Government may procure, or enter into any contract for the procurement of, any goods, technology, or services from these companies; (2) no department or agency of the U.S. Government may provide any assistance to these parties; (3) no U.S. Government sales to the foreign persons of any item on the United States Munitions List are permitted, and all sales to these persons of any defense articles, defense services, or design and construction services under the Arms Export Control Act are terminated; and (4) no new individual licenses shall be granted for the transfer to these foreign persons of items the export of which is controlled under the Export Administration Act of 1979 or the Export Administration Regulations, and any existing such licenses are suspended.

The State Department maintains a website containing a list of entities sanctioned under the Iran and Syria Nonproliferation Act at www.state.gov/t/isn/c15234.htm. However, note that the title of this page has not been changed to reflect the correct name of the law or to include the newly sanctioned entities.

Labels: State Department