Archive for the ‘Dual-Use’ Category

Need Export Compliance Training?

Friday, September 25th, 2009 by Danielle McClellan

One of the most obvious trends in US export and reexport controls is the dramatic increase in the number of enforcement cases for companies charged with violating US rules.  If you add complicated export and reexport regulations to the fact that potentially hundreds of employees in a single facility may export technical data, software or hardware, company compliance personnel certainly are under a lot of pressure to keep their companies out of trouble.  Training has to be a critical element of any company’s export compliance program, whether you have a team of export specialists or one person responsible for export controls.  Without consistent education on the EAR and ITAR you and your company are very susceptible to running afoul of the complex and changing regulations.

The Export Compliance Training Institute (“ECTI”) has created its e-Seminars to deliver expert training to individuals and companies that need training but don’t have the travel budget or the time to travel to a live, in person seminar. ECTI’s e-Seminars offer an in-depth understanding of the current regulations and what you need to do to keep your company compliant – without leaving your desktop. Two e-Seminars are available:  US Export Controls and US Defense Trade Controls.  John Black and Maarten Sengers, two of the world’s leading export compliance experts and teachers, are the e-Seminar instructors.

e-Seminars include video presentations, seminar slides and our seminar manuals on a usb drive with free next day shipping to the 50 US Continental States.

For more information go to http://www.learnexportcompliance.com/e-Seminars

BIS: Intra-Company Transfers Won’t Require a License if You Implement Thorough Compliance Procedures

Sunday, November 16th, 2008 by Danielle McClellan

US to export, reexport, or transfer (in-country) dual-use goods to their sister companies without a license. Items on the CCL could be exported among the companies for internal company use without the burden of obtaining a license. (more…)

State Department Proposes Clarification of Export Jurisdiction over Aircraft Components

Wednesday, May 21st, 2008 by Guest Author

On April 11, 2008 the Department of State, Directorate of Defense Trade Controls (DDTC) published a proposed change to the International Traffic in Arms Regulations (ITAR). The notice of proposed rulemaking would add language intended to clarify the application of Section 17(c) of the Export Administration Act of 1979 (EAA) to the implementation of the ITAR and the Department of State’s obligations under the Arms Export Control Act (AECA). The proposed change would affirm that jurisdiction over exports of certain civil aircraft parts and components lies with the Department of Commerce under the Export Administration Regulations (EAR), and not with the Department of State under the ITAR. Comments on the proposed amendment will be accepted by the Department of State through May 12, 2008. (more…)

New Guidelines for Supporting Docs for DSP-73 and DSP-61

Friday, May 16th, 2008 by Danielle McClellan

The DDTC has published the new guidelines for supporting documentation requirements for license types DSP-73 and DSP-61. These requirements became effective April 15, 2008 and any stand alone license applications that are submitted after this date are subject to Return Without Action.

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Mancuso Calls for Strengthening US Government’s Enforcement Tools

Friday, May 16th, 2008 by Danielle McClellan

Secretary Mancuso delivered the keynote address on March 17, 2008 at the Export Control Forum in Newport Beach California. Mancuso emphasized the need to strengthen the US dual-use export control enforcement architecture and pushed for Congress to pass “a reauthorized Export Administration Act as quickly as possible.”

He also restated that his three highest policy priorities are still:

  • Refining BIS’s enforcement efforts; focusing on terrorists, proliferators, and nations with transshipment concern;
  • Reforming and updating dual-use export controls to enhance US national security and competitiveness;
  • Accelerating and elevating international engagement with the most dynamic high technology markets in the world.

More information:

Bush Signs IEEPA Enhancement Act

Tuesday, October 16th, 2007 by Danielle McClellan

On October 16, 2007 President Bush signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act to enhance administrative and criminal penalties that can be imposed under the IEEPA. IEEPA currently is the underlying law that authorized the Export Administration Regulation (EAR) controls on commercial and dual use items. Certain aspects of the act have been amended to explain penalties that may be assessed for unlawful acts.

The Enhancement Act amends the current IEEPA by clarifying that civil penalties may be assessed against those who conspire to violate, or cause violation of any license, order, regulation or prohibition of the United States Code. Violators can now be fined up to $1,000,000 and/or up to 20 years in prison for criminal penalties. Criminal liability will also be included, and is described as anyone who “willfully conspires to commit, or aids or abets in the commission of” an unlawful act. Any criminal enforcement actions commenced on or after October 16, 2007 will be subject to the new penalties. Civil penalties will result in a fine amounting to the greater of $250,000 or twice the value of the transaction that is the basis of the violation. Any civil enforcement actions that are pending, meaning a Final Order has not been signed, or commenced on or after October 16, 2007 will be under the new civil penalties.

There are however, five circumstances that will be general exceptions to the IEEPA Enhancement Act. Those practices will include:

  • Cases that settle before filing of a charging letter with an Administrative Law Judge, BIS usually charges only the most serious violation per transaction.
  • Cases that settle before filing of a charging letter with an Administrative Law Judge BIS may also charge each violation not directly connected to a specific export or antiboycott related transaction which may include conspiracy, evasion, or false statements made to a Special Agent.
  • If BIS chooses to file a charging letter with an Administrative Law Judge because of mutually agreeable settlement cannot be reached, then BIS will reserve its right to proceed with all available charges based on th4e facts presented.
  • BIS draws meaningful distinctions based upon the relative seriousness of any offense. More serious offenses result in higher penalties for the purposes of settlement discussions.
  • BIS affords great weight mitigation of up to a 25% reduction of the amount of penalties to be assessed for the existence of an effective export compliance program in place before the violation and later upgraded.
  • For all valid Voluntary Self-Disclosures, BIS gives great weight mitigation that generally results in a reduction of at least 50% of the calculated penalty-and does so after considering the aggravating and mitigating factors in the case.

Mario Mancuso, Secretary of Commerce for Industry and Security, explains that, “The new law provides significant additional support for our cases, which we intend to apply in an equitable, deliberative and rigorous way. Most important, we think the enhancements will better align incentives to improve overall compliance with our regulations.”

More information:

BIS Factsheet: Charging and Penalty Practices (PDF)

BIS news release

Substantial Tightening of Chemical/Biological Controls

Friday, April 1st, 2005 by Scott Gearity

Without formally requesting comments, BIS on April 14 published a rule substantially increasing export restrictions on several items subject to controls for chemical or biological weapons reasons (CB). This regulation comes only two weeks after a March 30 rule expanding the scope of CB catch-all controls to include members of the Australia Group (AG), the multilateral group which seeks to limit the proliferation of chemical and biological weapons. Steven Goldman, director of the Office of Nonproliferation and Treaty Compliance, first alerted the exporting community to the prospect of the new rule in a January 27 meeting of the Materials Technical Advisory Committee (MTAC). (This is as good a time as any to remind folks to be sure to read the meeting minutes of the TACs related to your business for all sorts of interesting nuggets, at least from those committees which deign to hold their discussions in open session and bother to publish minutes at all.)

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Chips Up for Boeing, Chips Down For Most Others

Thursday, February 26th, 2004 by John Black

Here is a follow up to our Chip Fixation article: State and Commerce issued Federal Register Notices in which they attempted to resolve the Commodity Jurisdiction (CJ) debacle surrounding an apparently dual use avionics chip that was originally designed for defense use.

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Chip Fixation Creates CJ Chaos

Friday, December 26th, 2003 by Maarten Sengers

Did you ever think that a $400 postage stamp sized chip would cause upwards of a thousand commercial jets to become subject to State Department defense trade licensing requirements?  Well, a closely watched case is doing precisely that, and in the process is sowing utter confusion among the hapless export compliance administrators already struggling to understand the commodity jurisdiction decision making process between the dual use Export Administration Regulations (EAR) and the defense use International Traffic in Arms Regulations (ITAR).

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State Publishes New Agreements Guidelines

Friday, December 26th, 2003 by Maarten Sengers

The Directorate of Defense Trade Controls (DDTC) issued new Guidelines for drafting Technical Assistance Agreements (TAA’s), Manufacturing License Agreements (MLA’s) and the like on its website.   You should immediately use the new guidelines and templates therein when preparing and submitting your TAA or MLA applications.

The new Guidelines are substantially more detailed than the old, though the actual MLA and TAA templates look virtually the same.  What’s different is the degree of explanations and clarifications contained in the new Guidelines that were not found in the old. They also contain new sample letters and templates.   A full accounting of all the changes is difficult, but notable changes include:

  1. Warehousing and Distribution Agreements dropped from the new Guidelines – The new Guidelines drop templates for Warehousing and Distribution Agreements.  These Agreements were typically used for establishing distribution centers for defense articles outside the United States.  But their actual use has been discouraged for years.  Apparently, DDTC is discouraging their use even more by dropping them altogether from the Guidelines.
  2. New Template for Proviso Reconsideration – How many of you have had conflicting provisos on your Agreement?  My personal favorite was an Agreement which had two provisos to the effect of 1) Shipment of hardware by separate license (e.g. DSP-5) is authorized and 2) Shipment of hardware by separate license (e.g. DSP-5) is not authorized.  The new Guidelines offer a suggested format for Proviso reconsideration to deal with those conflicting or impossible Provisos such as these.
  3. Dual Nationals Disclosure – The new Guidelines advise that you list the nationalities of all third country nationals and dual nationals that may be employed by your overseas licensee – see section 10.2 of the Guidelines.   This is now an explicit written instruction on what has been provided as informal, and often ignored, verbal guidance in the past.
  4. Foreign National Employees in the US – The Guidelines clarify that “most” foreign national employees should be licensed through a DSP-5, not a TAA.   A TAA must be used only when the employee must receive “technical training.”