Archive for the ‘2013’ Category

A Very Busy Year for Canadian Economic Sanctions and Export Controls With More to Follow in 2014

Thursday, March 27th, 2014 by Brooke Driver

2014/03/27

By: John Boscariol

Canadian export controls specialist John Boscariol of McCarthy Tétrault–to speak at ECTI’s US Export Controls for Non-US Companies seminar series in Montreal this May–analyzes the current state of Canadian economic sanctions and trade controls. 

As we start the New Year, it is an opportune time for Canadian companies engaged in international or cross-border activities to review the key changes to Canada’s economic sanctions, anti-terrorism and trade and technology controls during 2013 to ensure compliance programs, including due diligence and screening processes, are fully up-to-date and risks of contravention and enforcement action are minimized. This is particularly important in light of the substantial financial and reputational costs of violating these laws.

For Canada, 2013 was another very active year as trade and technology control measures were liberalized in some areas while significantly tightened in others. The most important developments of this past year and some thoughts on what to expect for 2014 are discussed below.

Further Liberalization of Encryption Controls

In its continuing effort to level the playing field for Canadian companies subject to export and technology transfer controls over information security goods and technology, on January 14, 2013 the Canadian government issued a General Export Permit – GEP No. 46 (Cryptography for Use by Certain Consignees) – which allows for the transfer of finished products containing controlled cryptography to affiliates without having to apply for an individual export permit.

Under this GEP, transfers may be made to a consignee in another country that is (i) controlled by a resident of Canada or (ii) is controlled by an entity that has its head office in one of 29 designated countries and controls the resident of Canada who is making the transfer. The exporter must notify Foreign Affairs, Trade and Development Canada’s Export Controls Division (ECD) prior to the first transfer in each calendar year and then report on transfers made during the previous calendar year by January 31. Transferors must respond to ECD information requests within 15 days. In the case of physical exports, “GEP-46” must be specified on the export report filed with the Canada Border Services Agency.

Update of Export Control List

On February 13, 2013, the Canadian government announced a number changes to Canada’s Export Control List (ECL), which sets out the goods, services and technology subject to export and technology transfer controls that include permit and reporting requirements. Many additions and removals of controls, as well as clarifications to existing controls, were made in order to reflect Canada’s obligations and commitments under international control regimes – in this case, the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies, the Nuclear Suppliers Group, the Missile Technology Control Regime and the Australia Group. The amendments brought Canada up to date with its commitments under these international arrangements as of April 2011.

The changes impact goods, software and technology that are dual-use commercial items in ECL Group 1 (including encryption), military items in Group 2, missile control-related items in Group 6, as well as chemical and biological items in Group 7.

The new Guide to Canada’s Export Controls (April 2011) reflecting these changes came into effect on March 15, 2013.

Comprehensive Economic Sanctions Imposed Against Iran

Effective May 29, 2013, Canada expanded its existing economic sanctions measures against Iran under the Special Economic Measures (Iran) Regulations (Iran Regulations). Up until that time, Canada’s sanctions against Iran had been restricted to nuclear and military activities, financial services, as well as activities in certain sectors of the Iranian economy, including oil and gas, mining, telecommunications and shipping.

Key Measures

These are the most significant changes to Canada’s economic sanctions against Iran since a financial services ban was imposed on November 22, 2011. The amendments include three key measures that apply to persons in Canada and Canadian outside Canada:

(i) a prohibition against exporting, selling, supplying or shipping goods, wherever situated, to Iran, to a person in Iran, or to a person for the purposes of a business carried on in or operated from Iran;

(ii) a prohibition against importing, purchasing, acquiring, shipping or transhipping any goods that are exported, supplied or shipped from Iran, whether the goods originated in Iran or elsewhere; and

(iii) a prohibition against making an investment in an entity in Iran.

Goods that are sourced or supplied under a contract entered into before May 29, 2013 are exempted, provided that they were not already banned pursuant to the pre-existing measures and certain other conditions are satisfied. There are some other limited exceptions, including for informational materials, personal and settlers’ effects, and non-commercial packages sent by mail. Exemptions have also been added for equipment, services and software that facilitate secure and widespread communications via information technologies (provided that an export permit has been issued in respect of any export-controlled goods) and for goods used to purify water for civilian and public health purposes.

Prohibited Dealings Involving Designated Persons

There are now over 600 entities and individuals that have been designated under Canada’s Special Economic Measures (Iran) Regulations.

Companies and individuals are prohibited from engaging in a wide range of dealings with designated persons under Canada’s numerous economic sanctions programs, including its measures against Iran. Canadians are also subject to reporting requirements in respect of property owned or controlled by designated persons and related proposed or actual transactions. Financial institutions, including federally regulated banks and provincial trust and loan companies and securities dealers, are required to monitor and determine on a continuing basis whether they are in possession or control of property owned or controlled by or on behalf of a designated person under these measures.

Potential for Relaxation?

On November 23, 2013 an agreement between Iran and the P5+1 (the United States, United Kingdom, Germany, France, Russia, and China, facilitated by the European Union) was announced that provides for the halting of Iran’s nuclear program in return for the relaxation of certain sanctions measures. However, the Canadian government has been clear that it is skeptical of Iran’s commitments and that comprehensive sanctions will remain in force while it reviews the deal and Iran’s progress in implementation and granting access to its nuclear facilities.

Major Changes Coming to the Defence Production Act and Controlled Goods Program

On November 19, 2013, Public Works and Government Services Canada launched consultations on proposed amendments to the Defence Production Act (DPA) which will have a significant impact on Canadian companies in the defence, aerospace, security and satellite sectors.

Companies that are subject to the DPA and its Controlled Goods Regulations must comply with significant registration, screening and security obligations in their dealings with controlled goods and technology within Canada. The proposed amendments to the Schedule to the DPA will significantly change the scope of products and technology subject to the Controlled Goods Program (CGP), including by removing just over half of the current entries.

The Canadian CGP was designed to work hand-in-hand with the U.S. International Traffic in Arms Regulations (ITAR) regime so that, generally speaking, the kinds of goods and technology controlled for ITAR purposes would also be subject to domestic security controls in Canada under the CGP. These latest amendments have been proposed in response to complaints that CGP requirements are overly burdensome and there have been problems specifically with the intersection of the Canadian and U.S. regimes. This has included instances in which items that were no longer controlled under the U.S. ITAR regime are still being controlled under the Canadian CGP regime, a challenge that would become more difficult as the United States reforms its export controls and moves items from United States Munitions List control under the U.S. State Department to dual-use control under the U.S. Commerce Department.

It is important to note that none of the proposed changes will impact Canadian controls on the export or transfer of controlled goods or technology from Canada.

Prospects for 2014

In addition to the DPA defense trade control changes discussed above, amendments to export controls are also anticipated as Canada continues to update its Export Control List in accordance with its international obligations, including under the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. Canadian companies engaged in cross-border transactions should be closely monitoring developments under Wassenaar and other international control regimes to anticipate coming changes to Canadian law in this area – this includes new controls over goods and technology associated with internet and network surveillance.

Further, all indications are that Canada will continue to implement an aggressive economic sanctions and anti-terrorism regime, not simply based on multilateral initiatives through the United Nations Security Council, but also through unilateral measures where Canada is of the view that UN measures are insufficient or non-existent. This continues to be the case for Canada’s measures controlling dealings with a number of countries, including Iran, Syria, Belarus, Burma (Myanmar), Zimbabwe and North Korea.

Canadian companies and financial institutions should be carefully reviewing their compliance policies and screening lists in light of these latest developments. Because of the substantial financial and reputational impact that contraventions in this area can have, it is important that any company doing business internationally, whether in the goods, services or technology sector, ensure appropriate compliance and due diligence measures are in place. These include: maintaining compliance manuals; appointing responsible compliance officers; screening customers, end-users and suppliers; providing training programs; conducting internal audits; establishing disclosure procedures; and reviewing contracts and other legal documentation on a regular basis.

At the present time, Canada imposes trade controls of varying degrees on activities involving the following countries (and in many cases, listed entities and individuals associated with them): Belarus, Burma (Myanmar), Côte d’Ivoire, the Democratic Republic of the Congo, Cuba, Egypt, Eritrea, Guinea, Iran, Iraq, Lebanon, Liberia, Libya, North Korea, Pakistan, Somalia, Sudan, Syria, Tunisia and Zimbabwe. Any involvement of these countries or any “designated person” in proposed transactions or other activities should raise a red flag for further investigation to ensure compliance with export and technology transfer controls and economic sanctions.
______________________________________________________________________________

John W. Boscariol is a partner at McCarthy Tétrault LLP and leader of the firm’s International Trade & Investment Law Group. He specializes in compliance and enforcement matters related to anti-corruption laws and policies, economic sanctions and export controls and other laws governing the cross-border trade in goods, services and technology and foreign investment.

Commerce/Census: “Tips on How to Resolve AES Fatal Errors”

Thursday, January 30th, 2014 by Brooke Driver

2014/01/30

By: Brooke Driver

Source: AES Broadcast #2013103, U.S. Census Bureau, census@subscriptions.census.gov

When a shipment is filed to the AES, a system response message is generated and indicates whether the shipment has been accepted or rejected. If the shipment is accepted, the AES filer receives an Internal Transaction Number (ITN) as confirmation. However, if the shipment is rejected, a Fatal Error notification is received.

To help you resolve AES Fatal Errors, here are some tips on how to correct the most frequent errors that were generated in AES this month.

Fatal Error Response Code: 515

  • Narrative: Export Control Classification Number (ECCN)  Must Be Formatted NANNN
  • Reason: The ECCN was not reported in the correct format.
  • Resolution: The ECCN must be reported in a NANNN format, where N is a numeric character and A is an alpha character. Verify the ECCN, correct the shipment and resubmit.

Fatal Error Response Code: 538

  • Narrative: Shipping Weight Must Be Greater Than Zero For Mode of Transportation
  • Reason: The Shipping Weight is reported as zero.
  • Resolution:  When the Mode of Transportation Code is Vessel, Rail, Truck or Air, a Shipping Weight must be reported. Verify the Mode of Transportation Code and Shipping Weight, correct the shipment and resubmit.

For a complete list of Fatal Error Response Codes, their reasons, and resolutions, see Appendix A – Commodity Filing Response Messages.

It is important that AES filers correct Fatal Errors as soon as they are received in order to comply with the Foreign Trade Regulations. These errors must be corrected prior to export for shipments filed predeparture and as soon as possible for shipments filed postdeparture, but not later than ten calendar days after departure.

For further information or questions, contact the U.S. Census Bureau’s AES Branch.

Telephone: (800) 549-0595, select option 1 for AES
Email: askaes@census.gov
Online: www.census.gov/trade
Blog: http://globalreach.blogs.census.gov/

Maryland Man Imprisoned for 8 Years for Participating in Conspiracy to Help Iran Launch First Satellite

Thursday, January 30th, 2014 by Brooke Driver

2014/01/30

By: Brooke Driver

Nader Modanlo, a born Iraqi and naturalized U.S. citizen living in Potomac, Maryland, was recently sentenced to eight years in prison, three years of probation and a whopping $10,000,000 fine for violating the International Emergency Economic Powers Act, money laundering and obstructing bankruptcy proceedings. A number of government agencies were involved in constructing the case against Modanlo, including U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the Internal Revenue Service’s Criminal Investigation and the Defense Criminal Investigative Service.

The 53-year-old took part in a complex conspiracy (that took place between the years of 2000 and 2007) to illegally provide satellite related services to Iran. According to the evidence presented at trial, Modanlo used his expertise as a mechanical engineer and his background in finance and strategic policy as they relate to space-based telecommunications to facilitate the creation and launch of Iran’s first satellite.

In 1994, as the principal owner and president of Final Analysis, Inc., Modanlo began a working relationship with POLYOT, an aerospace company owned by the Russian government. Between the years 1995 and 2000, Final Analysis provided POLYOT with telecommunication satellites. Modanlo filed for and received the required licenses for these transactions.

However, in 2001, after Final Analysis was forced into bankruptcy, Modanlo founded New York Satellites Industries, running the company out of his own home. While working for Final Analysis, Modanlo began his illegal contract with POLYOT to construct and launch a remote sensing and telecommunications satellite for Iran, an agreement he honored under the name of his new company. Knowing that direct financial transactions would be difficult due to the sanction against the country, Modanlo and a number of other interested parties, including a former Iranian ambassador, met in Switzerland to discuss the details of the launch and the money exchange. To solve the problem, they formed a fake company called Prospect Telecom and opened a Swiss bank account under that name. Investors transferred funds to this account for the project, including $10,000,000 that was almost immediately sent to Modanlo’s New York Satellite Industries bank account as payment for his help in the launch, which took place October 2005. In the two years following the launch, Modanlo made false statements and withheld information regarding the ownership and aim of Prospect Telecom in bankruptcy proceedings.

Wassenaar Arrangement Modifies Controls on Electronic Surveillance Tools

Thursday, January 30th, 2014 by Brooke Driver

2014/01/30

By: Brooke Driver

At its annual plenary meeting in Austria December 3-4, 2013, the Wassenaar Arrangement, a group of 41 countries including the U.S., Russia, the U.K. and most E.U. states, focused on export controls for conventional arms and dual-use goods and technology, agreed on new harsher export controls on cybersecurity technologies, recognizing their great potential for terrorism. Each participating country must now implement these changed policies, one major area of which is surveillance and intelligence gathering tools, including malware and rootkits, which governments can use to bypass security features on electronic devices in order to attain supposedly protected data. Internet protocol network surveillance systems or equipment are also now subject to revised export controls, which include technologies used to screen for malware, viruses and surveillance programs. These technologies are subject to new controls, because representatives of the 41 countries believed that they could be used to both block cyber attacks and grant foreign persons dangerous insight into Western screening systems, increasing the potential for hacks. The agreement also places stricter controls on intelligence gathering technologies that analyze individuals’ or groups’ relational networks and activities, although there will be exceptions for companies using such software for marketing or consumer-monitoring purposes.

Click here for details of these changes and others decided upon at this year’s Wassenaar plenary meeting: http://www.wassenaar.org/controllists/2013/Summary%20of%20Changes%20to%20Control%20Lists%202013.pdf

Chinese National Sentenced to Nearly 5 Years in Prison for Attempting to Illegally Export Aerospace-Grade Carbon Fiber

Tuesday, December 31st, 2013 by Brooke Driver

2013/12/31

By: Brooke Driver

On December 10, 2013, Chinese citizen Ming Suan Zhang was sentenced to 57 months in prison for violating the International Emergency Economic Powers Act by attempting to export high-grade carbon fiber from the United States to China, which is controlled due to its applications in the defense and aerospace industries. Thankfully, Zhang’s attempt to negotiate a long-term contract for large amounts of the product to aid a Chinese company involved in the development of a military aircraft was intercepted by an undercover agent working with the Department of Commerce.

Federal authorities were first alerted to Zhang’s illegal activities when two Taiwanese buyers—at Zhang’s guidance—attempted to purchase several tons of specialized carbon fiber, including Toray type M60-JB-3000-50B (“M60”) on the Internet. Zhang intended to export the fiber to a Chinese customer. In their search for an entity selling the fiber, the two buyers contacted the UC, who informed them that a license was required to export the M60 outside the U.S. After the UC refused to do business with them without the necessary license, Zhang contacted him directly, claiming that one of his clients, an employee of a Chinese military company, required the fiber for a test flight of a “jet fighter plane.” Zhang emphasized that this “client” required the product as soon as possible, implying that the need for urgency outweighed licensure:

“Hello! Please find time to send me an email or call me to explain the situation, because the customer over here is rushing me. . . . On the 5th, [he] is handling the site of a new fighter aircraft test flight. He will return between the 10th and the 20th of next month. That’s why he requested that be done this month. . . . Thank you for your cooperation!”

Zhang was captured when he traveled to the United States to meet with the UC in order to obtain a sample of the specialized fiber. United States Attorney Lynch said of the case,

“The defendant brazenly disregarded U.S. law in an attempt to procure a highly sought after commodity and provide it to a foreign power. Foreign governments are willing to go to great lengths to acquire potentially dangerous materials such as specialized carbon fiber composites, which are of high value in the development of advanced weapons programs. We and our law enforcement partners will continue to use all of the tools in our arsenal to protect our technology and maintain the national security of the United States and its allies.”

State Department Posts Updated Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret and Embargo-Related Criminal Cases Report

Tuesday, December 31st, 2013 by Brooke Driver

2013/12/31

By: Brooke Driver

The DDTC has posted an updated Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret and Embargo-Related Criminal Cases Report on its website. The new report chronicles a selection of some of the major export enforcement, economic espionage, theft of trade secrets, and embargo-related criminal prosecutions undertaken by the Justice Department from January 2008 to present day. Specifically, the cases in the updated summary reflect investigations by the Homeland Security Investigations (formerly Immigration and Customs Enforcement), the Federal Bureau of Investigation, the Department of Commerce’s Bureau of Industry and Security, the Pentagon’s Defense Criminal Investigative Service and other law enforcement agencies.

You can access the summary here: http://pmddtc.state.gov/compliance/documents/OngoingExportCaseFactSheet112013.pdf.

Weatherford Subsidiaries Pay $252.7 Million for Export Violations and Bribing Government Officials in Violation of the FCPA

Tuesday, December 31st, 2013 by Brooke Driver

2013/12/31

By: Brooke Driver

In November, Weatherford International Ltd. broke a BIS penalty record, suffering a fine of $100 million for its subsidiaries’ 174 violations of the regulations. The company was also charged with violating the Foreign Corrupt Practices Act’s anti-bribery provisions and federal export controls regulations. On November 26, Weatherford and three of its subsidiaries pled guilty to these charges, and agreed to pay a massive penalty of nearly $252.7 million, to retain an independent corporate compliance monitor for at least 18 months, and to implement an improved compliance program in order to prevent and detect future FCPA violations. The huge fines demanded by the U.S. Government in this case are a reflection of the company’s repeated (and varied) efforts to intentionally evade U.S. law. According to the Department of Justice, Weatherford International’s subsidiaries:

  • purposely failed to establish an effective system of internal accounting controls designed to detect and prevent corruption, including FCPA violations
  • operated a joint venture in Africa with two local entities controlled by foreign officials and their relatives for the purpose of bribing those officials
  • bribed a foreign official in Africa to approve renewal of a contract in 2006
  • paid $15 million of improper “volume discounts” to a distributor in hopes of establishing a slush fund to bribe a national oil company’s executives

Apparently, these illegal activities earned the company nearly $54.5 million in profits.

Co-director of the SEC’s Enforcement Division Andrew Ceresney described some of the methods Weatherford used to conceal its illegal activities:

“They used code names like ‘Dubai across the water’ to conceal references to Iran in internal correspondence, placed key transaction documents in mislabeled binders, and created whatever bogus accounting and inventory records were necessary to hide illegal transactions.”

Given the extensive measures to which Weatherford went in order to avoid U.S. regulations and the widespread corruption of the organization, it is difficult to believe Chief Executive Bernard J. Duroc-Danner’s statement that:

“With the internal policies and controls currently in place, we maintain a best-in-class compliance program and uphold the highest of ethical standards as we provide the industry’s leading products and services to our customers worldwide.”

If Weatherford’s compliance program is truly “best-in-class” material, the exporting world as we know it is doomed.

Making Up License and Agreement Numbers Will Get You in Trouble: Former Honeywell Compliance Officer Debarred for Falsifying Government Authorizations

Tuesday, December 31st, 2013 by Brooke Driver

2013/12/31

By: Brooke Driver

On November 25, 2013, the State Department announced that LeAnne Lesmeister of Honeywell has been debarred for three years from participating in any activities that are subject to the International Traffic in Arms Regulations as a result of her multiple violations of the Arms Export Controls Act. Given the nature of the charges against her, it is quite surprising that DDTC has not yet decided to enforce either civil or criminal penalties. Apparently, Lesmeister, who had worked as Honeywell’s Clearwater, Florida branch senior export compliance officer for 27 years, committed 21 ITAR violations during the period between 2008 and 2012, when she circumvented Honeywell’s compliance program by fabricating Department of State authorizations. Based on these counterfeit licenses, Honeywell exported defense articles—including technical data—and provided defense services to various foreign persons without Department approval, in violation of the AECA and ITAR.

DDTC issued the charging letter against Lesmeister in July, but received no answer from the accused. As Lesmeister did not contest the charges against her (or bother to respond at all), the Department considered the violations verified and debarred the former Honeywell employee. The charging letter contains a variety of startling evidence of Lesmeister’s crimes and disregard for U.S. law, such as the following:

Lesmeister used fake DSP-5 license numbers or reused numbers from previously approved licenses to Honeywell for unrelated products or, in other cases, numbers from previously approved licenses to unrelated applicants where a Honeywell entity sometimes appeared as a party, but often not at all.

With intent to falsify an approved technical assistance agreement, Lesmeister reportedly assured a Honeywell employee that “we are expecting to see approval within about a week at max, all staffed agencies have responded so it is just a matter of getting the licensing office to finalize.”

Regarding a fake DSP-5 license and forged technical assistance agreement, Lesmeister commented to two Honeywell employees, “[t]hey ended up sending it to me – it ain’t pretty but it is official.”

Several of the alleged violations related to Honeywell’s Miniature Inertial Measurement Unit, which provides stability and pointing for various types of spacecraft. Recipients of the illicit products included a number of foreign space programs, such as Europe’s Galileo satellite navigation system, Europe’s Exomars Mars exploration mission, Argentina’s Arsat program and Eutelsat’s W6A telecommunications satellite. In addition, end users of the illegal transactions were located throughout Europe and South America and in the countries of Canada and Israel. Honeywell voluntarily disclosed these violations upon discovery, and cooperated fully with the Department, implementing remedial measures to address the conditions that allowed one employee, in a position of authority, to execute numerous and intentional export compliance violations. Honeywell’s first move, of course, was to fire Lesmeister in June of 2012, just four days after she was charged. As a result, it seems, of the company’s efforts and transparency, the Department has not yet issued any charges against Honeywell, which is somewhat surprising, considering certain descriptions of Lesmeister’s fabrications in the charging letter that detail some very obvious red flags; Lesmeister’s fabricated  DSP-5 licenses were described as “low-quality scan[s],” included “page numbers [that] were not sequential” and contained obvious discrepancies (“the country of ultimate destination was inconsistent with the end-users listed”).

Honeywell spokesman Scott Sayres claims, however, that the company will not make the same mistake again:

“Honeywell is committed to acting with integrity in all our business dealings. That’s why we immediately and voluntarily reported to the U.S. Department of State the discrepancies we discovered in export authorization documentation that led to this decision. We also took strong corrective action, including initiating a comprehensive review of our processes to ensure this type of misconduct doesn’t happen again. Appropriate disciplinary action was taken and the employee is no longer with the company. This was an isolated departure from Honeywell’s values and should not taint the hard work and honesty of our nearly 140,000 people world-wide.”

In this case, we can learn from the bad habits of others. A more balanced internal check system and routine audits would have proved helpful here. Perhaps, if Lesmeister had not enjoyed unchallenged authority, she would not have been able to fake her job for four years (and maybe 27 years).

Commerce/Census: “Tips on How to Resolve AES Fatal Errors”

Tuesday, December 31st, 2013 by Brooke Driver

2013/12/31

By: Brooke Driver

Source: AES Broadcast #2013098; census@subscriptions.census.gov

When a shipment is filed to the AES, a system response message is generated and indicates whether the shipment has been accepted or rejected. If the shipment is accepted, the AES filer receives an Internal Transaction Number (ITN) as confirmation. However, if the shipment is rejected, a Fatal Error notification is received.  To help you resolve AES Fatal Errors, here are some tips on how to correct the most frequent errors that were generated in AES this month.

* Fatal Error Response Code: 120
* Narrative: Carrier Unknown
* Reason: The Carrier ID (SCAC/IATA) reported is not known in AES.
* Resolution:  For vessel, rail or truck shipments the carrier must be identified with an active SCAC code issued by the National Motor Freight Traffic (NMFTA). For air shipments, the carrier must be identified with an active IATA code issued by the International Air Transport Association.

If the Carrier ID (SCAC/IATA) as known at the time of filing is not valid in AES and a valid Carrier ID (SCAC/IATA) cannot be obtained from the carrier, as a last resort, report the Carrier ID as UNKN for vessel, rail or truck shipments. For an unknown air carrier, report one of the acceptable “unknown” codes as follows:

– F or 99F for Unknown Foreign Air Carrier
– U or 99U for Unknown U.S. Air Carrier
– C or 99C for Unknown Canadian Air Carrier
– or 99O for flyaway aircraft reported under Chapter 88

Verify the Mode of Transportation Code and the Carrier ID (SCAC/IATA), correct the shipment and resubmit.

* Fatal Error Response Code: 167
* Narrative: Transportation Reference Number Contains Leading or Embedded Spaces
* Reason:  The Transportation Reference Number contains leading or embedded spaces.
* Resolution: The Transportation Reference Number cannot contain leading or embedded spaces. Left justify the Transportation Reference Number and remove all spaces within the number.  Verify the Transportation Reference Number, correct the shipment and resubmit.

For a complete list of Fatal Error Response Codes, their reasons, and resolutions, see Appendix A – Commodity Filing Response Messages.

It is important that AES filers correct Fatal Errors as soon as they are received in order to comply with the Foreign Trade Regulations. These errors must be corrected prior to export for shipments filed predeparture and as soon as possible for shipments filed postdeparture, but not later than ten calendar days after departure.

For further information or questions, contact the U.S. Census Bureau’s AES Branch.
Telephone: (800) 549-0595, select option 1 for AES
Email: askaes@census.gov
Online: www.census.gov/trade
Blog: blogs.census.gov/globalreach

BIS Publishes Advisory Letter Concerning Screening Requirements for Posting Time-Limited EAR99 Software on Public Website

Tuesday, December 31st, 2013 by Brooke Driver

2013/12/31

By: Brooke Driver

At the end of October, BIS posted a response to an email advisory opinion request sent last March that answered the question “Are free trial periods subject to the EAR?” Specifically, the unidentified inquirer wanted to find out if he/she could skip screening for prohibited parties and embargoed destinations during a 30-day trial period of EAR99 classified software that would be publicly available for download from their website. The individual would then perform the necessary screening after the trial period, when the customer is required to purchase an unlock code to continue using the software.

BIS responded that, technically, the product is subject to the EAR during the 30-day trial period, because the software is only available for free download during a limited time period, and is therefore not publicly available under Section 734.7 of the EAR. Commerce was quick to add, however, that just because the software, in this situation, is subject to the EAR, this does not mean that it is in violation of the regulations. As long as the download is completely free and anonymous and the software distributer has no reason to believe that a prohibited person or entity in an embargoed country will download the product, it is not in violation of the EAR.