OFAC: Specially Designated Nationals List Update

August 3rd, 2017 by Danielle McClellan

The following individuals have been added to OFAC’s SDN List (Venezuela-related Designations):

ALBISINNI SERRANO, Rocco, Miranda, Guarico, Venezuela; DOB 06 Mar 1982; Gender Male; Cedula No. 15481927 (Venezuela); President of Venezuela’s National Center for Foreign Commerce (CENCOEX); Former Vice Minister of the State and Socialist Economy of Venezuela’s Ministry of Economy and Finance; Current or Former Principal Director of Venezuela’s National Development Fund (FONDEN) (individual) [VENEZUELA].

FLEMING CABRERA, Alejandro Antonio, Caracas, Capital District, Venezuela; DOB 03 Oct 1973; Gender Male; Cedula No. 11953485 (Venezuela); Vice Minister for Europe of Venezuela’s Ministry of Foreign Affairs; Former Vice Minister for North America of Venezuela’s Ministry of Foreign Affairs; Former President of Venezuela’s National Center for Foreign Commerce (CENCOEX); Former President for Suministros Venezolanos Industriales, C.A. (SUVINCA) of Venezuela’s Ministry of Commerce; Former Ambassador of Venezuela to Luxembourg and Chief Ambassador of the Venezuelan Mission to the European Union (individual) [VENEZUELA].

GARCIA DUQUE, Franklin Horacio (Latin: GARCÍA DUQUE, Franklin Horacio), Miranda, Venezuela; DOB 19 Aug 1963; citizen Venezuela; Gender Male; Cedula No. 9125430 (Venezuela); Former National Director of Venezuela’s Bolivarian National Police; Former Commander of the West Integral Strategic Defense Region of Venezuela’s National Armed Forces (individual) [VENEZUELA].

JAUA MILANO, Elias Jose (Latin: JAUA MILANO, Elías José), Miranda, Venezuela; DOB 16 Dec 1969; POB Caucagua, Miranda, Venezuela; citizen Venezuela; Gender Male; Cedula No. 10096662 (Venezuela); Head of Venezuela’s Presidential Commission for the Constituent Assembly; Venezuela’s Minister of Education; Venezuela’s Sectoral Vice President of Social Development and the Revolution of Missions; Former Executive Vice President of Venezuela (individual) [VENEZUELA].

LUCENA RAMIREZ, Tibisay (Latin: LUCENA RAMÍREZ, Tibisay), El Recreo, Libertador, Capital District, Venezuela; DOB 26 Apr 1959; POB Barquisimeto, Lara, Venezuela; citizen Venezuela; Gender Female; Cedula No. 5224732 (Venezuela); Passport 3802006 (Venezuela); President of Venezuela’s National Electoral Council; President of Venezuela’s National Board of Elections (individual) [VENEZUELA].

MALPICA FLORES, Carlos Erik, Naguanagua, Carabobo, Venezuela; DOB 17 Sep 1972; Gender Male; Cedula No. 11810943; Former National Treasurer of Venezuela; Former Vice President of Finance for Petroleos de Venezuela, S.A. (PDVSA); Former Presidential Commissioner for Economic and Financial Affairs (individual) [VENEZUELA].

PEREZ AMPUEDA, Carlos Alfredo (Latin: PÉREZ AMPUEDA, Carlos Alfredo), Caracas, Capital District, Venezuela; DOB 13 Dec 1966; citizen Venezuela; Gender Male; Cedula No. 9871452 (Venezuela); National Director of Venezuela’s Bolivarian National Police; Former Commander of Carabobo Zone for Venezuela’s Bolivarian National Guard (individual) [VENEZUELA].

REVEROL TORRES, Nestor Luis (Latin: REVEROL TORRES, Néstor Luis), Zulia, Venezuela; El Valle, Libertador, Caracas, Capital District, Venezuela; DOB 28 Oct 1964; citizen Venezuela; Gender Male; Cedula No. 7844507 (Venezuela); Passport A0186449 (Venezuela); Venezuela’s Minister of Interior, Justice, and Peace; Former Commander General of Venezuela’s Bolivarian National Guard; Former Director of Venezuela’s Anti-Narcotics Agency (individual) [VENEZUELA].

RIVERO MARCANO, Sergio Jose (Latin: RIVERO MARCANO, Sergio José), Caracas, Captial District, Venezuela; DOB 08 Nov 1964; citizen Venezuela; Gender Male; Cedula No. 6893454 (Venezuela); Commander General of Venezuela’s Bolivarian National Guard; Former Commander of the East Integral Strategic Defense Region of Venezuela’s National Armed Forces (individual) [VENEZUELA].

SAAB HALABI, Tarek William, Anzoategui, Venezuela; DOB 10 Sep 1962; citizen Venezuela; Gender Male; Cedula No. 8459301 (Venezuela); Passport 5532000 (Venezuela); Venezuela’s Ombudsman; President of Venezuela’s Republican Moral Council (individual) [VENEZUELA].

SUAREZ CHOURIO, Jesus Rafael (Latin: SUÁREZ CHOURIO, Jesús Rafael), Aragua, Venezuela; Caracas, Venezuela; DOB 19 Jul 1962; citizen Venezuela; Gender Male; Cedula No. 9195336 (Venezuela); General Commander of Venezuela’s Bolivarian Army; Former Commander of Venezuela’s Central Integral Strategic Defense Region of Venezuela’s National Armed Forces; Former Commander of Venezuela’s Aragua Integrated Defense Zone of Venezuela’s National Armed Forces; Former Leader of the Venezuelan President’s Protection and Security Unit (individual) [VENEZUELA].

VARELA RANGEL, Maria Iris (Latin: VARELA RANGEL, María Iris), Caracas, Capital District, Venezuela; DOB 09 Mar 1967; POB San Cristobal, Tachira, Venezuela; citizen Venezuela; Gender Female; Cedula No. 9242760 (Venezuela); Passport 8882000 (Venezuela); Member of Venezuela’s Presidential Commission for the Constituent Assembly; Venezuela’s Former Minister of the Penitentiary Service (individual) [VENEZUELA].

ZERPA DELGADO, Simon Alejandro (Latin: ZERPA DELGADO, Simón Alejandro), Sucre, Miranda, Venezuela; DOB 28 Aug 1983; Gender Male; Cedula No. 16544324 (Venezuela); Vice President of Finance for Petroleos de Venezuela, S.A. (PDVSA) ; President of Venezuela’s Economic and Social Development Bank (BANDES); President of Venezuela’s National Development Fund (FONDEN); Vice Minister of Investment for Development  of Venezuela’s Ministry of Economy and Finance; Principal Director of Venezuela’s Foreign Trade Bank (BANCOEX); Principal Director of Venezuela’s National Telephone Company (CANTV); Current or Former Presidential Commissioner to the Joint Chinese Venezuelan Fund; Current or Former Principal Board Member of Venezuela’s National Electric Corporation (CORPOELEC); Former Executive Secretary of Venezuela’s National Development Fund (FONDEN) (individual) [VENEZUELA].

Details: https://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20170726.aspx

Revisions to EAR Parts 742, 744, 772, & 774

August 3rd, 2017 by Danielle McClellan

The Bureau of Industry and Security (BIS) is amending the Export Administration Regulations (EAR) to reflect changes to the Missile Technology Control Regime (MTCR) Annex that were agreed to by MTCR member countries back in October 2016.

Changes:

§ 742.5 (Missile technology)

  • In § 742.5 (Missile technology), this final rule revises the first sentence of paragraph (a)(2), which describes the definition of ‘‘missiles.’’ The term ‘‘missiles’’ is a defined term in § 772.1, but for ease of reference the first sentence of this paragraph (a)(2) restates the definition.

Conforming Change to § 742.5(a)(2)

  • This final rule makes conforming changes in paragraph (a)(2) of § 742.5, by replacing the term ‘‘ballistic missile systems’’ with the term ‘‘ballistic missiles’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM), and by replacing the term ‘‘cruise missile systems’’ with the term ‘‘cruise missiles.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM).
  • This final rule also makes a conforming change by replacing the term ‘‘unmanned air vehicles’’ with the term ‘‘unmanned aerial vehicles.’’ (Conforming Change to MTCR Annex). Substantively, there is no difference between the old and revised terms, but this final rule makes these conforming changes to ensure consistent use of the terminology throughout the EAR. These conforming changes are described in more detail in the next three paragraphs, describing the changes that this final rule makes to the EAR definitions of ‘‘missiles’’ and ‘‘unmanned aerial vehicles.’’

Conforming Change to § 744.3

  • This final rule makes conforming changes in § 744.3 by changing the term ‘‘ballistic missile systems’’ to ‘‘ballistic missiles’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM), and changing the term ‘‘cruise missile systems’’ to ‘‘cruise missiles.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM). These conforming changes are described in more detail in the next two paragraphs describing the changes that this final rule makes to the EAR definitions of ‘‘missiles’’ and ‘‘unmanned aerial vehicles.’’
  •  In addition, this final rule makes conforming changes in § 744.3 by replacing the term ‘‘unmanned air vehicles’’ with ‘‘unmanned aerial vehicles’’ wherever this term appears in this section. (Conforming Change to MTCR Annex). Substantively, there is no difference between the old and revised terms, but this final rule makes these conforming changes to ensure consistent use of the terminology throughout the EAR.
  • Lastly, this final rule removes the first reference to ‘‘and’’ in the section heading for the parenthetical phrase providing an illustrative list of examples of rocket systems. This ‘‘and’’ is removed because it is not needed to convey the meaning of the list of examples of rocket systems. These conforming changes are clarifications and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

Changes and Conforming Amendments in § 772.1 (Definitions of Terms as Used in the Export Administration Regulations (EAR))

  • In § 772.1, this final rule amends the definition of the term ‘‘missiles.’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM). Under the definition of ‘‘missiles,’’ this final rule revises the term ‘‘ballistic missile systems’’ by removing the word ‘‘systems’’ and adding an ‘‘s’’ to ‘‘missile.’’
  • This final rule revises the definition of ‘‘missiles’’ to reflect changes in the description of complete rocket systems in the MTCR Annex. The final rule revises the term ‘‘ballistic missile systems’’ by removing the word ‘‘systems,’’ thus referring only to the flight vehicle.
  • This final rule makes this change to conform to the other items in the illustrative list of ‘‘missiles,’’ and to clarify that a missile is covered under these entries that use this control text, regardless of whether it is part of a larger system (e.g., a system including the flight vehicle and ground support equipment such as launch, recovery, and flight control equipment). This final rule also makes conforming changes to the same terms used in ECCNs 2B018 and 5A101, as described below.
  • This final rule also makes a conforming change in the ECCNs for the use of the term ‘‘unmanned air vehicles,’’ which this final rule replaces with ‘‘unmanned aerial vehicles.’’ (Conforming Change to MTCR Annex). Substantively, there is no difference between the two formulations of the term, but this final rule makes these conforming changes to ensure consistent use of the terminology throughout the EAR.
  •  Lastly, this final rule removes the last sentence of the definition and adds it as a note to the definition. This clarifying change is made because the sentence is more appropriately included as a note to the definition. These changes correspond with the U.S. interpretation of the controls, and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

Revised Term for Unmanned Aerial Vehicle

  • In addition, in § 772.1, this final rule amends the definition of the revised term, ‘‘unmanned aerial vehicle.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM). Under the definition of ‘‘unmanned aerial vehicle,’’ this final rule revises the term ‘‘cruise missile systems’’ by removing the word ‘‘systems’’ and adding an ‘‘s’’ to ‘‘missile.’’
  • The definition of ‘‘unmanned aerial vehicles’’ has been updated to reflect changes in the description of unmanned aerial vehicles in the MTCR Annex. The term ‘‘Cruise missile systems’’ has been changed by removing the word ‘‘systems,’’ thus referring only to the flight vehicle. This change both conforms to the other items in the illustrative list of unmanned aerial vehicles, and clarifies that an unmanned aerial vehicle is covered under these entries that use this control text, regardless of whether or not it is part of a larger system (e.g., a system including the flight vehicle and ground support equipment such as launch, recovery, and flight control equipment).
  • This final rule also makes conforming changes to similar text used in ECCNs 2B018 and 5A101 described below. These changes correspond with the U.S. interpretation of the controls, and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.updated to reflect changes in the description of unmanned aerial vehicles in the MTCR Annex. The term ‘‘Cruise missile systems’’ has been changed by removing the word ‘‘systems,’’ thus referring only to the flight vehicle. This change both conforms to the other items in the illustrative list of unmanned aerial vehicles, and clarifies that an unmanned aerial vehicle is covered under these entries that use this control text, regardless of whether or not it is part of a larger system (e.g., a system including the flight vehicle and ground support equipment such as launch, recovery, and flight control equipment).
  • This final rule also makes conforming changes to similar text used in ECCNs 2B018 and 5A101 described below. These changes correspond with the U.S. interpretation of the controls, and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

Amendments to the Commerce Control List (CCL)

ECCN 1C107

  • This final rule amends ECCN 1C107 by revising the introductory text of paragraph d. and adding a paragraph d.3 in the List of Items Controlled section.
  • This final rule also adds a Note and a Technical Note to ECCN 1C107.d.3 to clarify the scope of paragraph d.3. (MTCR Annex Change, Category II: Item 6.C.6., Busan 2016 Plenary). Specifically, in the introductory text of ECCN 1C107.d, this final rule removes the phrase ‘‘silicon carbide materials’’ and adds in its place the phrase ‘‘high-temperature materials.’’ This change is made because of the addition of certain bulk machinable ceramic composite materials that this final rule adds to ECCN 1C107 under new ‘‘items’’ paragraph d.3. Ultra High Temperature Ceramic Composites (UHTCC) are materials that combine Ultra High Temperature Ceramics (UHTC) with fiber reinforcement. The UHTCs can be used in environments that exhibit extremes in temperature, chemical reactivity, and erosive attack. The combination of the UHTC and fiber reinforcement can mitigate some of the traditional drawbacks associated with ceramics, including a tendency to fracture. Typical end uses for these composites are leading edges for hypersonic vehicles, nose tips for re- entry vehicles, rocket motor throat inserts, jet vanes, and control surfaces, which this final rule adds as examples in the new control text.
  • This final rule also adds a note to 1C107.d.3 to make clear that the UHTC materials that do not have fiber reinforcement are not caught under this control. Additionally, this final rule adds a technical note to 1C107.d to provide examples of UHTCs which are included. This change is expected to result in an increase of 1– 3 applications received annually by BIS. This very small increase is because this material is not widely used or exported, but specific to the end uses described in the control text.

ECCN 1C111

  • This final rule amends ECCN 1C111 by revising paragraphs b.2 in the List of Items Controlled section to add a CAS (Chemical Abstract Service) Number. CAS Numbers are numerical identifiers assigned by the Chemical Abstracts Service (CAS) to every chemical substance described in open scientific literature, including organic and inorganic compounds, minerals, isotopes and alloys. The inclusion of CAS Numbers will make it easier to identify the materials controlled under this ‘‘items’’ paragraph of 1C111.
  • This final rule revises paragraph b.2 to add the CAS Number (CAS 69102–90–5) after the material ‘‘Hydroxy-terminated polybutadiene (including hydroxyl- terminated polybutadiene) (HTPB).’’ (MTCR Annex Change, Category II: Item 4.C.5.b., Busan 2016 Plenary). This change is not expected to have any impact on the number of license applications received by BIS.

ECCN 2B018

  • This final rule amends ECCN 2B018 by revising the ‘‘MT’’ paragraph in the table in the License Requirements section by revising the term ‘‘ballistic missile systems’’ to remove the term ‘‘systems’’ and add an ‘‘s’’ to the term ‘‘missile.’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM).
  • In addition, in the same ‘‘MT’’ paragraph, this final rule revises the term ‘‘cruise missile systems’’ to remove the term ‘‘systems’’ and add an ‘‘s’’ to the term ‘‘missile.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM).
  • Lastly, this final rule makes conforming changes in the same ‘‘MT’’ paragraph by replacing the term ‘‘unmanned air vehicles’’ with ‘‘unmanned aerial vehicles’’ wherever this term appears in this section. (Conforming Change to MTCR Annex). Substantively, there is no difference between the old and revised terms, but this final rule makes these conforming changes to ensure consistent use of the terminology throughout the EAR. These are conforming changes for the changes described above to the definitions of ‘‘missiles’’ and ‘‘unmanned aerial vehicles.’’ This is a clarification and will not change any scope of control. This change is not expected to have any impact on the number of license applications received by BIS.

ECCN 2B109

  • This final rule amends ECCN 2B109 by revising the list of examples included in the second technical note. This final rule expands the list of examples to include interstages, because interstages can also be manufactured using the flow forming machines described in ECCN 2B109. (MTCR Annex Change, Category II: Item 3.B.3., Busan 2016 Plenary). This change is not expected to have any impact on the number of license applications received by BIS, because this is only a change to the list of examples of products that can be made by this type of machine, and it does not change the scope of control.

ECCN 5A101

  • This final rule amends the heading of ECCN 5A101 by revising the term ‘‘ballistic missile systems’’ to remove the word ‘‘systems’’ and add an ‘‘s’’ to ‘‘missile.’’ (MTCR Annex Change, Category I: Item 1.A.1., Luxembourg 2016 TEM).
  • The final rule revises the heading by revising the term ‘‘cruise missile systems’’ to remove the word ‘‘systems’’ and add an ‘‘s’’ after ‘‘missile.’’ (MTCR Annex Change, Category I: Item 1.A.2., Luxembourg 2016 TEM). These are conforming changes for the changes described above to the definitions of ‘‘missiles’’ and ‘‘unmanned aerial vehicles.’’
  • In addition, this final rule revises the heading of ECCN 5A101 to create a separate parenthetical phrase for the illustrative list of examples that are unmanned aerial vehicles. This final rule does this by removing the examples of ‘‘cruise missiles, target drones, and reconnaissance drones’’ from the list of examples that followed the terms ‘‘unmanned aerial vehicle or rocket systems’’ in the heading and adding those examples immediately after the term unmanned aerial vehicle. This final rule retains the rest of the examples from the parenthetical that follows the term ‘‘rocket systems,’’ which will make it clearer that this parenthetical list is an illustrative list of ‘‘rocket systems.’’ (Conforming Change to MTCR Annex). These are clarifications and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

ECCN 7A103

  • This final rule amends ECCN 7A103 by adding a definition for ‘‘inertial measurement equipment and systems’’ for purposes of ECCN 7A103. In addition, this final rule revises ‘‘items’’ paragraph a and adds Note 3 in the List of Items Controlled section. (MTCR Annex Change, Category II: Item 9.A.6., Luxembourg 2016 TEM).
  • This final rule makes these changes to remove the ambiguous term ‘‘other equipment.’’ Instead, the locally defined term ‘‘inertial measurement equipment or systems’’ that the final rule adds to ECCN 7A103, along with an illustrative list of such equipment and systems, clarifies which types of equipment containing the specified accelerometers or gyros are caught by this entry.
  • This final rule also removes the phrase ‘‘and systems incorporating such equipment’’ because this phrase has been removed from the MTCR Annex. The changes this final rule makes to ECCN 7A103 to increase the clarity of the control should make the control more precise and rule out items not strictly used for navigation purposes. This change is expected to result in a decrease of 3 to 5 license applications received annually by BIS.
  • Lastly, this final rule updates and amends ECCN 7A103 by removing Related Controls paragraph (2), which is no longer accurate after changes were made to the EAR to correspond with changes made to USML Category XII (especially for unmanned aerial vehicles (UAVs) ) that became effective December 31, 2016 (See October 12, 2016, (81 FR 70320) final rule). In addition, this paragraph (2) can be removed because the USML Order of Review and CCL Order of Review will provide sufficient guidance on where items that are subject to the ITAR are classified under the USML and where items that are subject to the EAR are classified in either the ‘‘600 series’’ or in other ECCNs in Category 7 of the CCL.
  • Lastly, as a conforming change to the removal of paragraph (2), this final rule redesignates Related Controls paragraph (3) as new Related Controls paragraph (2).

ECCNs 9A101, 9E101, and 9E102

  • This final rule amends ECCN 9E101 by revising the Related Controls paragraph in the List of Items Controlled section to make a conforming change for the use of the term ‘‘unmanned air vehicles,’’ which this final rule changes to ‘‘unmanned aerial vehicles.’’
  • In addition, this final rule amends ECCN 9E101 and 9E102 by revising the headings of these two ECCNs to make conforming changes for the use of the term ‘‘unmanned air vehicles,’’ which this final rule changes to ‘‘unmanned aerial vehicles.’’ Substantively, there is not a difference in the two formulations of the term, but for consistency with how the term is used in other parts of the EAR, this final rule makes these conforming changes. (Conforming Change to MTCR Annex). This is a clarification and will not change any scope of control. These changes are not expected to have any impact on the number of license applications received by BIS.

New ECCN 9B104 and Related Conforming Amendments to 9D101, 9E001, and 9E002

  • This final rule adds new ECCN 9B104 to control certain aerothermodynamic test facilities. The facilities controlled under this new ECCN 9B104 are those that are usable for rockets, missiles, or unmanned aerial vehicles capable of achieving a ‘‘range’’ equal to or greater than 300 km and their subsystems, and having an electrical power supply equal to or greater than 5 MW or a gas supply total pressure equal to or greater than 3 MPa.
  • This final rule adds this new ECCN 9B104 to complement the controls that already exist for aerodynamic test facilities in order to fully cover the types of ground test facilities necessary to reproduce the flight environments that occur during the reentry phase. Plasma arc jet and plasma wind tunnel facilities simulate the atmospheric reentry thermal effects due to high velocity around the vehicles and are key to the qualification of vehicle thermal protection subsystems. This final rule includes values for electrical power supply and gas supply total pressure in new ECCN 9B104 to exclude commercial systems of a similar nature from this new ECCN.

Related Definition as part of new ECCN 9B104 to define the term ‘‘aerothermodynamic test facilities’’

  • This definition specifies that these facilities include plasma arc jet facilities and plasma wind tunnels for the study of thermal and mechanical effects of airflow on objects. (MTCR Annex Change, Category II: Item 15.B.6., Luxembourg 2016 TEM). As a conforming change to the addition of ECCN 9B104, this final rule adds 9B104 to the heading of ECCN 9D101 and revises the ‘‘MT’’ paragraph in the table in the License Requirements section of ECCNs 9E001 and 9E002 to add 9B104. The headings of ECCNs 9E001 and 9E002 do not need to be revised to add technology for 9B104, because those two technology ECCNs apply to 9B ECCNs, except for those specifically excluded in the ECCN headings. These changes are expected to result in an increase of no more than 1 application received annually by BIS, because such systems and their software and technology are exported infrequently.

ECCN 9D104

  • This final rule amends ECCN 9D104 by adding a note to the List of Items Controlled section. This note clarifies that ECCN 9D104 also includes specific software for the conversion of manned aircraft to an unmanned aerial vehicle. (MTCR Annex Change, Category II: Item 1.D.2., Luxembourg 2016 TEM). This change is expected to result in an increase of 1 to 2 applications received annually by BIS, because, although this software was already controlled here, the note will clarify the scope of ECCN 9D104.

Savings Clause : Shipments of items removed from eligibility for a License Exception or export or reexport without a license (NLR) as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting or reexporting carrier, or enroute aboard a carrier to a port of export or reexport, on July 7, 2017, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR) so long as they are exported or reexported before August 7, 2017. Any such items not actually exported or reexported before midnight, on August 7, 2017, require a license in accordance with this rule.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2017-07-07/pdf/2017-14312.pdf

House Budget Committee Proposes Moving BIS to State

August 3rd, 2017 by Danielle McClellan

(Source: U.S. House Budget Committee Report)

The following is an excerpt (pages 49-50) from the U.S. House Budget Committee, Building a Better America: A Plan for Fiscal Responsibility.

Building a Better America recommends a different path for the Department of Commerce.

Our budget supports the recent Presidential directives established by the Trump Administration to combat the regulatory burden placed on manufacturers and streamline the permitting review and approval processes. The Memorandum on Streamlining Permitting and Reducing Regulatory Burdens for Domestic Manufacturing (“Memorandum on Manufacturing”) provides for stakeholder engagement and feedback from the nation’s domestic manufacturers, in an effort to highlight unnecessary regulatory burdens and other administrative policies, practices, and procedures that inhibit economic growth and job creation. Our budget makes the following recommendations:

* Eliminate Corporate Welfare Programs in the Department of Commerce. Subsidies to businesses distort the economy, impose unfair burdens on taxpayers, and are especially problematic given the federal government’s fiscal situation. Programs under consideration for elimination could include the following:

  • The Hollings Manufacturing Extension Program. This program subsidizes a network of nonprofit extension centers that provide technical, financial, and marketing services for small and medium-size businesses. The private market generally provides these services. The program, which was supposed to be self-supporting, derives two-thirds of its funding from non-Federal sources.
  • The International Trade Administration [ITA]. This Department of Commerce agency provides trade-promotion services for U.S. companies. The fees it charges for its services do not cover the costs. Businesses can obtain similar services from state and local governments and the private market. Congress should eliminate the ITA or require it to charge for the full cost of these “Trade Promotion Authority” services.
  • The National Network for Manufacturing Innovation. This program, previously known as the Advanced Manufacturing Technology Consortia, provides federal grants to support research for commercial technology and manufacturing. As stated in the Heritage Foundation’s The Budget Book: “Businesses should not receive taxpayer subsidies; these long-lived and unnecessary subsidies increase federal spending and distort the marketplace. Corporate welfare to politically connected corporations should end.”

 

* Eliminate Overlap and Consolidate Necessary Department of Commerce Functions Into Other Departments. Since its establishment in 1903, the Commerce Department has expanded in size and scope to include many activities better suited at other agencies. The Department of Commerce and its various agencies and programs are rife with waste, abuse, and duplication. This budget recommends the following dissolution, delegation of authority, and consolidation measures:

  • Consolidate National Oceanic and Atmospheric Administration functions into the Department of the Interior;
  • Establish the U.S. Patent and Trademark Office as an independent agency;
  • Eliminate the International Trade Administration; o Delegate trade enforcement activities to the International Trade Commission;
  • Consolidate the Bureau of Industry and Security into the Department of State;
  • Eliminate the Economic Development Administration;
  • Consolidate trade adjustment activities within the Department of Labor, which has a duplicate program;
  • Consolidate the Minority Business Development Agency into the Small Business Administration;
  • Consolidate the National Institute of Standards and Technology and the National Technical Information Services within the National Science Foundation; o Consolidate the National Telecommunication and Information Administration into the Federal Communications Commission as an independent agency; and
  • Consolidate the United States Census Bureau and the Bureau of Economic Analysis into the Department of Labor’s Bureau of Labor Statistics.

Russia Will Struggle to Turn on Siemens Turbines in Sanctions-Bound Crimea

August 3rd, 2017 by Danielle McClellan

(Source: Reuters, 19 July 2017.)

MOSCOW (Reuters) – Russia outfoxed European Union sanctions by delivering gas turbines made by Germany’s Siemens to the annexed Ukrainian region of Crimea. Now for the hard part, switching them on.

No Russian company, according to Reuters data, has ever got a Siemens turbine working without the help of the manufacturer.

In this case, Siemens said the turbines were shipped to Crimea behind its back and is refusing to be involved, leaving Moscow to work out how to start them up to fulfill President Vladimir Putin’s promise to give Crimea a stable power supply.

Siemens has filed a lawsuit against its Russian customer over the delivery of the turbines to Crimea and says it will do everything in its power to block their installation and commissioning.

If Russia can somehow get the turbines operating at the two new power plants under construction, having already irked Europe by delivering them, it will again demonstrate its ability to thumb its nose at the sanctions.

Ten industry specialists who spoke to Reuters said starting up the turbines without engineers from Siemens or its partners would be a tough test of the country’s engineering resourcefulness, fraught with technical problems, expensive and a legal minefield.

“Without Siemens it will be very hard to do it,” said an industry source.

But the majority of the specialists said it can be done — even if it has never been attempted before.

Hunt for a Contractor

A firm involved in building the Crimean power plants had hired a Russian company called Interavtomatika, which is 45.7 percent owned by Siemens, to help turn on the turbines, according to three sources familiar with the project.

Since then, Siemens said it has got a written undertaking from Interavtomatika that it will halt any activities connected to Crimea.

In an implied threat to pull out of the venture, a company source familiar with the matter has also said Siemens is reviewing its engagement in its Russian businesses. The source declined to say whether that could affect Interavtomatika and Siemens declined to comment.

EU companies are banned from transferring energy technology to Crimea under the sanctions, imposed after Moscow seized the peninsula from Ukraine in 2014. But, in a loophole Moscow seems to have exploited, their Russian subsidiaries are not directly liable.

When asked if its turbines could be assembled, installed, and commissioned without its cooperation, Siemens said it was unwilling to speculate about future developments and did not want to fuel such speculation. Russia’s Energy Ministry did not respond to a Reuters request for comment.

Several of the industry sources said a Russian firm called ROTEK had experience with Siemens turbines. It is part of the Renova conglomerate controlled by billionaire Viktor Vekselberg.

The company, along with its partners, services 13 Siemens gas turbines in Russia similar to the model delivered to Crimea, according to ROTEK’s website. The company, asked by Reuters if it has been approached to help with the Crimea turbines, declined to comment.

Some of the Siemens turbines ROTEK services are installed at power stations owned by gas giant Gazprom and ROTEK services those ones with a Gazprom-owned firm called Teploenergoremont-Servis. That company, via a representative in Gazprom’s power division, declined to comment.

High Risk

Any Russian company that agrees to set up the Crimea turbines must weigh the “very high” risk of sanctions being imposed on any EU or US business it has, according to Artyom Zhavoronkov, partner in the Russian office of law firm Dentons.

Renova has assets in the European Union and the United States. Gazprom has assets in the European Union.

Russian officials have not acknowledged shipping Siemens turbines to Crimea. They say the turbines were obtained second hand and were Russian-made. Siemens makes turbines at a factory it co-owns in Russia.

Technopromexport, the Russian company building the Crimean power plants, has also not confirmed the turbines are made by Siemens. It declined to go into detail on how they would be serviced, beyond saying it would be “by Russian specialists and contractors”.

If no firm wants to take on the job, Technopromexport and its partners could instead assemble a team of specialists themselves to get the task done, several of the industry specialists said.

One person close to the Crimea power plants project said a recruitment drive was already underway to find people in the Russian power sector who had experience of launching Siemens gas turbines.

According to one industry specialist, 18 turbines of the same model now in Crimea have previously been launched in Russian power stations. As a result, there is a pool of people who have at least observed the turbines being commissioned.

“In theory you can try to launch them without Siemens,” said one industry specialist, who, like all the other people in the sector who spoke to Reuters, requested anonymity because of the sensitivity of the subject.

The turbines can be launched if you “gather up the people and the know-how from when these turbines were already used, in Russia and abroad,” said the first industry source.

The model of Siemens turbines the German firm and the three sources close to the power plant say is now in Crimea — the SGT5-2000E — is not the latest word in turbine technology, but is highly sophisticated.

It is run by an automatic control system that uses Siemens proprietary software. It contains highly-engineered parts — such as the blades that turn the turbine — which up to now have only ever been bought from Siemens or its partners.

The blades need to be replaced after between three and four years and no home grown Russian company manufactures blades compatible with the Siemens turbines in Crimea, several of the specialists told Reuters.

Workarounds mentioned by people in the industry included sourcing non-original spare parts from manufacturers in China, Russian engineers attempting to replicate the blades themselves or trying to buy them via intermediaries.

“There are organisations in Russia that, in principle, can make the blades,” said an energy sector source in ex-Soviet Belarus who has experience of working with Siemens equipment. “How reliable they are, that’s another matter.”

State/DDTC Posts Policy FAQ Update

August 3rd, 2017 by Danielle McClellan

(Source: State/DDTC)

DDTC has posted a Policy FAQ Update (June 2017). The content of the document is included below.

Update to Policy FAQs

Q: Does saving ITAR controlled technical data on the cloud constitute an export per ITAR § 120.17?

A: A cloud service provider’s receipt of effectively encrypted technical data uploaded by the U.S. owner, stored and managed on a cloud service network consisting of only U.S.-based servers, administered only by U.S. persons, and appropriately configured to enable the U.S. technical data owner to control access to such data does not constitute an export under the ITAR.

Post Location: here – Under “Technical Data”

 

Q: Are public universities eligible to use the ITAR § 125.4(b)(9) exemption?

A: If a public university is incorporated under applicable U.S. or state laws, such public universities are eligible to use the ITAR § 125.4(b)(9) exemption.

Post Location: here – Under “Exemptions”

 

Q: Which office (DDTC or RSAT) should a foreign end user contact if they are not certain of the original procurement method of a defense article (FMS or DCS) and is seeking a third party transfer or reexport/retransfer authorization?

A: Where a foreign end user is not certain of the original procurement method, RSAT is the appropriate office for the foreign end user to submit a request (PM_RSAT-TPT@state.gov). In such cases, RSAT will process the request and coordinate with DDTC. Information on RSAT and the third party transfer process can be found here. Whether for RSAT or DDTC, to facilitate adjudication of the request, we ask that the foreign end user provide a best-faith statement as to what it believes to be the original acquisition method (i.e., via DCS or FMS), a summary of steps taken to investigate the acquisition of the article(s), and any other information that may be helpful.

Post Location: here– Under “Retransfer”

 

Q: Is the term “at the company’s facilities” in ITAR § 120.39(a)(2) include only a company’s headquarters, or also includes travel to other facilities?

A: If a contracted employee is employed ordinarily at their company’s facilities, they may also provide services for the company’s clients outside the company’s facilities. Such activities are within the definition of a regular employee in ITAR § 120.39(a)(2).

Post Location: here – Under “Terminology”

 

Q: What is meant by “commercial invoice” in ITAR § 123.9(b)(1)?

A: The term “commercial invoice” references the document that moves with the freight.

Post Location: here – Under “Automated Export System”

 

Update References to ITAR § 124.16 (Either Remove or Change Reference Instead to § 126.18(d)) here.

(1) Remove FAQ Entirely: Can a foreign party choose to use § 126.18 for an individual that qualifies for § 124.16? (weblink)

(2) Update References Instead to § 126.18(d)): Can § 124.16 [change to “§ 126.18(d)”] be used to authorize dual/third country nationals of § 124.16 [change to “§ 126.18(d)(2)”] countries employed by the applicant or other US Signatories to the Agreement? (weblink)

(3) Update Reference Instead to § 126.18(d)): When an agreement involves the transfer of classified defense articles, can § 124.16 [change to “§ 126.18(d)”] still be used to authorize dual/third country nationals access to only unclassified defense articles associated with the agreement? (weblink)

(4) Remove FAQ Entirely: Per § 124.12(a)(10) “This agreement (does/does not) request retransfer of defense articles and defense services pursuant to § 124.16.” Should this statement include a reference to technical data? (weblink)

 

New Blue Lantern FAQs

Post Location: New Subheading “Blue Lantern Program” here.

 

Q: What is the Blue Lantern program?

A: Established in 1990, the Blue Lantern program monitors the end-use of defense articles, technical data, services, and brokering activities exported through commercial channels and subject to Department of State licenses or other approvals under section 38 of the Arms Export Control Act (AECA) (22 U.S.C. 2778) and the International Traffic in Arms Regulations (ITAR) (22 CFR Parts 120-130).

 

Q: Is end-use monitoring mandated by U.S. law?

A: Yes. The Blue Lantern program fulfills those requirements stipulated in section 40A of the AECA (22 U.S.C. 2785) and delegated to the Department of State in Executive Order 13637.

 

Q: What does the Blue Lantern program entail?

A: Blue Lantern end-use monitoring includes pre-license, post-license, and post-shipment checks to verify the bona fides of foreign consignees and end-users, confirm the legitimacy of proposed transactions, and provide reasonable assurance that 1) the recipient is complying with the requirements imposed by the United States Government with respect to use, transfers, and security of defense articles and defense services; and 2) such articles and services are being used for the purposes for which they are provided.

 

Q: Who manages the Blue Lantern program?

A: The Blue Lantern program is managed by the Regional Affairs and Analysis Division (RAA), Office of Defense Trade Controls Policy (DTCP), Directorate of Defense Trade Controls (DDTC), Bureau of Political- Military Affairs (PM) at the U.S. Department of State. Generally, checks are conducted by Department of State personnel working from U.S. embassies and consulates worldwide.

Beware of Contracts Signed by Specially Designated Nationals

August 3rd, 2017 by Danielle McClellan

(Source: Commonwealth Trading Partners)

By: Chalinee Tinaves, Esq., Commonwealth Trading Partners, ctinaves@ctp-inc.com.

On July 20, 2017, the Office of the Foreign Assets Control (OFAC) announced a $2 million penalty against ExxonMobil Corporation and two of its subsidiaries for violating the Ukraine-Related Sanctions Regulations. According to OFAC, ExxonMobil violated the sanctions when its execs dealt in services with Igor Sechin, President of Rosneft OAO, when they signed eight legal documents relating to oil and gas projects in Russia between May 14, 2014, and May 23, 2014.

If you’ll travel back in time to March 2014, as tensions were heating up regarding Russian deployment of military forces in the Crimea region of Ukraine, President Obama issued Executive Order 13661, “Blocking Property of Additional Persons Contributing to the Situation in Ukraine,” in response to actions deemed to constitute an unusual and extraordinary threat to the national security and foreign policy of the U.S. Section 1(a)(ii) authorized the Secretary of the Treasury to designate officials of the Government of the Russian Federation, block any property or interests in property, and prohibit dealing in any property and interests in property of a person listed on the Specially Designated Nationals and Blocked Persons List (SDN List). Section 4 of E.O. 13661 prohibited US persons from making “any contribution or provision of funds, goods, or services by, to, or for the benefit of any person whose property and interests in property are blocked pursuant to this order” as well as receiving “any contribution or provision of funds, goods, or services” from a designated person.

On April 28, 2014, OFAC designated Igor Sechin as an official of the Russian government, thereby generally prohibiting US persons from conducting transactions with him. Although Rosneft OAO is:

  • designated on the Sectoral Sanctions Identifications List (SSI List) pursuant to Executive Order 13662 “Blocking Property of Additional Persons Contributing to the Situation in Ukraine;”
  • subject to Directive 2 (prohibiting transacting in, providing financing for, or otherwise dealing in new debt of greater than 90 days maturity if that debt is issued on or after the sanctions effective date by, on behalf of, or for the benefit of the persons operating in Russia’s energy sector); and
  • subject to Directive 4 (prohibition against the direct or indirect provision of, exportation, or reexportation of goods, services, or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil in the Russian Federation or in maritime area claimed by Russian Federation and extending from its Territory); nonetheless, Rosneft OAO is not designated on the SDN List and is therefore not subject to blocking sanctions.

As you can see, the conflict lies in how to conduct business transactions with an organization that is not blocked with an executive who is. According to the release, OFAC rejected ExxonMobil’s position that Sechin was acting in his professional capacity as President of Rosneft OAO when they signed the legal documents. Specifically, ExxonMobil referenced comments by a Treasury Department spokesman in April 2014 allowing BP Plc Chief Executive, Bob Dudley, to remain on the board of directors of Rosneft OAO so long as he did not discuss personal business with Sechin. In rejecting this argument, OFAC indicated that statement did not address ExxonMobil’s conduct nor did the plain language of Ukraine-Related Sanctions Regulations include a distinction between “personal” or “professional.” Further, OFAC has not interpreted the Regulations to create a carve-out for designated parties acting in their professional capacity.

Interestingly, in support of its position, OFAC pointed to its Frequently Asked Question #285 published on March 18, 2013, regarding the Burma Sanctions Program. Although conveniently now removed from OFAC’s FAQs and website following the termination of the Burma Sanctions Regulations, an archived link detailing FAQ #285 captured the full text of OFAC’s response to ministry dealings with a designated Burmese Government minister. According to OFAC:

A government ministry is not blocked solely because the minister heading it is an SDN. U.S. persons should, however, be cautious in dealings with the ministry to ensure that they are not, for example, entering into any contracts that are signed by the SDN.

However, in Treasury’s restatement of FAQ #285 in the ExxonMobil announcement, OFAC indicated that US parties should “be cautious in dealings with [a non-designated] entity to ensure that they are not providing funds, goods, or services to the SDN, for example, by entering into any contracts that are signed by the SDN.”

Rejecting ExxonMobil’s rebuttal that OFAC regulations state that different interpretations may exist among and between the sanctions programs that it administers, FAQ #285 “clearly signaled” that OFAC views the signing of a contract with an SDN as prohibited, even if the entity on whose behalf the SDN signed was not sanctioned in situations where sanctions programs also involve SDNs. These reasons, in addition to the definitions of “property” and “property interest” in the Ukraine-Related Sanctions Regulations, E.O. 13661, and statements issued by the White House and the Department of Treasury, served to provide ExxonMobil with notice that signing the legal documents with Sechin would violate the prohibitions in the Ukraine-Related Sanctions Regulations.

In assessing the penalty based on OFAC’s Economic Sanctions Enforcement Guidelines, among other aggravating factors, OFAC viewed ExxonMobil’s transaction to be a show of “reckless disregard for U.S. sanctions requirements when it failed to consider warning signs associated with dealing in the blocked services of an SDN” and contributed “significant harm” to the objectives of the Ukraine-Related Sanctions Program. Following the announcement, ExxonMobil stood by its position that it acted in full compliance with the sanctions guidelines in 2014 and argued that the Treasury Department is “trying to retroactively enforce a new interpretation of an executive order that is inconsistent with the explicit and unambiguous guidance from the White House and Treasury issued before the relevant conduct and still publicly available today.”

What does all this mean for U.S. companies? While FAQ #285 was initially crafted to address contracts with a designated government official (which Sechin satisfied based on his designation as a Russian official), it is unclear whether this interpretation would also be applicable in situations involving non-government SDNs and their corporate dealings. Further, the prohibited conduct of entering into a contract signed by an SDN in FAQ #285 was listed as an example. It is entirely possible that a range of other contract activities are prohibited by SDNs like negotiating a contract. Companies must be aware of the risks associated with projects that would require authorization by an SDN. Further, companies can mitigate their risk by screening all the parties involved in a transaction to avoid potentially violating a sanctions program.

Treasury/OFAC Publishes New Cuba-Related FAQs

July 19th, 2017 by Danielle McClellan

(Source: Treasury/OFAC)

Frequently Asked Questions on President Trump’s Cuba Announcement

 

(1) How will OFAC implement the changes to the Cuba sanctions program announced by the President on June 16, 2017?  Are the changes effective immediately?

OFAC will implement the Treasury-specific changes via amendments to its Cuban Assets Control Regulations.  The Department of Commerce will implement any necessary changes via amendments to its Export Administration Regulations.  OFAC expects to issue its regulatory amendments in the coming months.  The announced changes do not take effect until the new regulations are issued.

 

(2) What is individual people-to-people travel, and how does the President’s announcement impact this travel authorization?

Individual people-to-people travel is educational travel that: (i) does not involve academic study pursuant to a degree program; and (ii) does not take place under the auspices of an organization that is subject to U.S. jurisdiction that sponsors such exchanges to promote people-to-people contact.  The President instructed Treasury to issue regulations that will end individual people-to-people travel.  The announced changes do not take effect until the new regulations are issued.

 

(3) Will group people-to-people travel still be authorized?

Yes.  Group people-to-people travel is educational travel not involving academic study pursuant to a degree program that takes place under the auspices of an organization that is subject to U.S. jurisdiction that sponsors such exchanges to promote people-to-people contact.  Travelers utilizing this travel authorization must maintain a full-time schedule of educational exchange activities that are intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities, and that will result in meaningful interaction between the traveler and individuals in Cuba.  An employee, consultant, or agent of the group must accompany each group to ensure that each traveler maintains a full-time schedule of educational exchange activities.

 

(4) How do the changes announced by the President on June 16, 2017 affect individual people-to-people travelers who have already begun making their travel arrangements (such as purchasing flights, hotels, or rental cars)?

The announced changes do not take effect until OFAC issues new regulations.  Provided that the traveler has already completed at least one travel-related transaction (such as purchasing a flight or reserving accommodation) prior to the President’s announcement on June 16, 2017, all additional travel-related transactions for that trip, whether the trip occurs before or after OFAC’s new regulations are issued, would also be authorized, provided the travel-related transactions are consistent with OFAC’s regulations as of June 16, 2017.

Department of the Treasury Office of Foreign Assets Control (OFAC)

 

(5) How do the changes announced by the President on June 16, 2017 affect other authorized travelers to Cuba whose travel arrangements may include direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy?

The announced changes do not take effect until OFAC issues new regulations.  Consistent with the Administration’s interest in not negatively impacting Americans for arranging lawful travel to Cuba, any travel-related arrangements that include direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy will be permitted provided that those travel arrangements were initiated prior to the issuance of the forthcoming regulations.

 

(6) How do the changes announced by the President on June 16, 2017 affect companies subject to U.S. jurisdiction that are already engaged in the Cuban market and that may undertake direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy?

The announced changes do not take effect until OFAC issues new regulations.  Consistent with the Administration’s interest in not negatively impacting American businesses for engaging in lawful commercial opportunities, any Cuba-related commercial engagement that includes direct transactions with entities related to the Cuban military, intelligence, or security services that may be implicated by the new Cuba policy will be permitted provided that those commercial engagements were in place prior to the issuance of the forthcoming regulations.

 

(7) Does the new policy affect how persons subject to U.S jurisdiction may purchase airline tickets for authorized travel to Cuba?

No. The new policy will not change how persons subject to U.S. jurisdiction traveling to Cuba pursuant to the 12 categories of authorized travel may purchase their airline tickets.

 

(8) Can I continue to send authorized remittances to Cuba?

Yes.  The announced policy changes will not change the authorizations for sending remittances to Cuba.  Additionally, the announced changes include an exception that will allow for transactions incidental to the sending, processing, and receipt of authorized remittances to the extent they would otherwise be restricted by the new policy limiting transactions with certain identified Cuban military, intelligence, or security services.  As a result, the restrictions on certain transactions in the new Cuba policy will not limit the ability to send or receive authorized remittances.

 

(9) How does the new policy impact other authorized travel to Cuba by persons subject to U.S. jurisdiction?

The new policy will not result in changes to the other (non-individual people-to-people) authorizations for travel.  Following the issuance of OFAC’s regulatory changes, travel-related transactions with prohibited entities identified by the State Department generally will not be permitted. Guidance will accompany the issuance of the new regulations.

 

(10) How will the new policy impact existing OFAC specific licenses?

The forthcoming regulations will be prospective and thus will not affect existing contracts and licenses.

 

(11) How will U.S. companies know if their Cuban counterpart is affiliated with a prohibited entity or sub-entity in Cuba?

The State Department will be publishing a list of entities with which direct transactions generally will not be permitted.  Guidance will accompany the issuance of the new regulations.  The announced changes do not take effect until the new regulations are issued.

 

(12) Is authorized travel by cruise ship or passenger vessel to Cuba impacted by the new Cuba policy?

Persons subject to U.S. jurisdiction will still be able to engage in authorized travel to Cuba by cruise ship or passenger vessel.

Following the issuance of OFAC’s regulatory changes, travel-related transactions with prohibited entities identified by the State Department generally will not be permitted.  Guidance will accompany the issuance of the new regulations.

For more information on the National Security Presidential Memorandum visit: https://www.whitehouse.gov/blog/2017/06/16/fact-sheet-cuba-policy.

Trump Calls for Slight Rollback on Obama’s Slight Relaxations for Cuba

July 19th, 2017 by Danielle McClellan

(Source: Reuters, 16 June 2017.)

President Donald Trump on Friday ordered tighter restrictions on Americans traveling to Cuba and a clampdown on U.S. business dealings with the island’s military, saying “with God’s help a free Cuba is what we will soon achieve.”

As Trump laid out his new Cuba policy in a speech in Miami, the White House announced plans to roll back parts of former President Barack Obama’s historic opening to the communist-ruled country after a 2014 diplomatic breakthrough between the two former Cold War foes. But Trump was leaving many of Obama’s changes, including the reopened U.S. embassy in Havana, in place even as he sought to show he was making good on a campaign promise to take a tougher line against Cuba. “We will not be silent in the face of communist oppression any longer,” Trump told a cheering crowd in Miami’s Cuban-American enclave of Little Havana, including Republican Senator Marco Rubio, who helped forge the new restrictions on Cuba.

Trump’s revised approach, which will be enshrined in a new presidential directive, calls for stricter enforcement of a longtime ban on Americans going to Cuba as tourists and seeks to prevent U.S. dollars from being used to fund what the new U.S. administration sees as a repressive military-dominated government.

But facing pressure from U.S. businesses and even some fellow Republicans to avoid turning back the clock completely in relations with communist-ruled Cuba, the Republican president chose to leave intact many of his Democratic predecessor’s steps toward normalization. The new policy bans most U.S. business transactions with the Armed Forces Business Enterprises Group, a Cuban conglomerate involved in all sectors of the economy, but makes some exceptions, including for air and sea travel, according to U.S. officials. This will essentially shield U.S. airlines and cruise lines serving the island. However, Trump will stop short of breaking diplomatic relations restored in 2015 after more than five decades of hostilities. He will not cut off recently resumed direct U.S.-Cuba commercial flights or cruise-ship travel, though his more restrictive policy seems certain to dampen new economic ties overall.

The administration, according to one White House official, has no intention of “disrupting” existing business ventures such as one struck under Obama by Starwood Hotels Inc., which is owned by Marriott International Inc., to manage a historic Havana hotel. Nor does Trump plan to reinstate limits that Obama lifted on the amount of the island’s coveted rum and cigars that Americans can bring home for personal use. While the changes are far-reaching, they appear to be less sweeping than many U.S. pro-engagement advocates had feared. Still, it will be the latest attempt by Trump to overturn parts of Obama’s presidential legacy. He has already pulled the United States out of a major international climate treaty and is trying to scrap his predecessor’s landmark healthcare program.

The following article provides OFAC’s recent FAQs regarding President Trump’s statement about Cuba.

Cryomech Charged for Illegal Export to Russian Company on Entity List

July 19th, 2017 by Danielle McClellan

By: Ashleigh Foor

Cryomech, Inc. of Syracuse, NY has received a charge involving its exports of  an LNP-20 Liquid Nitrogen Plant, an item classified as EAR99 in the EAR, from the United States to the All-Russian Scientific Research Institute of Experimental Physics (VNIIEF) a.k.a Russian Federal Nuclear Center-VNIIEF (RFNC-VNIIEF) in Sarov, Russia. Cryomech shipped this item, valued at $33,587, without the required BIS License on or around August 16, 2012. On June 9, 2017 the company received a civil penalty of $28,000 as well as an order to hire an unaffiliated third-party consultant with expertise in U.S. export control laws to complete an external audit of its entire export controls compliance program. Cryomech will not be debarred if penalty is paid and audit is completed with results submitted.

Settlement Documents: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1114-e2501/file

Export and Recordkeeping Violations Nets $700,000 Fine for Axis Communications

July 19th, 2017 by Danielle McClellan

By: Ashleigh Foor

On June 9, 2017 a total of 15 charges were brought against Chelmsford, MA company, Axis Communications, Inc, resulting in a $700,000 fine and a thorough audit of its entire export controls compliance program.

Thirteen of the charges were from exporting thermal imaging cameras without the required licenses on, around, or between the dates of March 16, 2011 and July 15, 2013. Axis exported thermal imaging cameras controlled by the Export Administration Regulations (EAR) from the United States to Mexico. Valued at $391,819, these exports required export license. Thermal imaging cameras, classified under Export Control Classification Number 6A003.b.4, are controlled for national security and regional stability reasons.

Axis also received two charges for failing to comply with EAR recordkeeping requirements. In mid-June of 2013, when these thermal imaging cameras were being shipped from the United States to Mexico, Axis allegedly did not keep the required documents and invoices connected to these exports. The EAR requires companies to retain these transaction documents. Axis’ failure to do so, in addition to its thirteen charges of exporting without a required license, resulted in a civil penalty of $700,000 and an order to undergo an external audit of the company’s export controls compliance program. Axis was required to hire an unaffiliated third-party consultant with an expertise in U.S. export control laws to conduct the audit. The order, given June 9, 2017, stated the company would be put on an export denial list unless fine is paid as arranged and audit is completed with results submitted.