Archive for the ‘EAR’ Category

Lebanon Company Fined $450,000 for Reexporting Items to Syria

Tuesday, November 15th, 2016 by Danielle McClellan

2016/11/15

By: Danielle McClellan

Tecnoline SAL (Tecnoline )of Sin El Fil, Beirut, Lebanon pled guilty to 7 charges of Causing, Aiding, or Abetting a Violation of the Regulations and will pay a civil penalty of $450,000. Tecnoline reexported US-origin mass spectrometers, gas chromatographs and consumables, liquid chromatograph-mass spectrometer systems, and liquid chromatograph modules (ECCN 3A999), controlled for anti-terrorism reasons, to Syria. There is a long standing US Embargo against Syria which makes a BIS license required for all exports/reexports subject to the EAR with the only exception being food and certain medicines).

The items were manufactured by Agilent Technologies (Agilent), a US company, and Technoline was an authorized distributor and reseller of Agilent’s products. In 2004, Technoline signed an agreement with Agilent that acknowledged their awareness of US export control laws and regulations and agreed to comply with them as a reseller and distributor of controlled products. Between August 2009 and October 2010, Technoline negotiated price discounts on the items with Agilent and eventually ordered the items for the Syrian Government ministries or entities. Technoline falsely identified the ultimate destination of the items as being Iraq or Lebanon (BIS license not required) and on one or more occasions they failed to disclose the ultimate destination of the items. Agilent shipped the items to TEchnoline in Beirut, Lebanon via Agilent’s German subsidiary. Once Technoline received the items they transferred them to Syria, there they were installed at Syrian Government ministries within a month or so. There were never any authorizations from BIS to export the items from the US to Syria, or to reexport them from Germany to Syria.

View Order: https://efoia.bis.doc.gov/index.php/documents/export-violations/export-violations-2015/1080-e2474/file

Antiboycott Violation Nets $238,000 Fine for Furnishing Prohibited Business Information

Tuesday, November 15th, 2016 by Danielle McClellan

2016/11/15

By: Danielle McClellan

Coty Middle East FZCO (UAE) has agreed to pay $238,000 to settle 70 violations of 15 CFR §760.2(d) – Furnishing Information about Business Relationships with Boycotted Countries or Blacklisted Persons.

Coty Middle East FZCO is a foreign affiliate of Coty Inc., a US company located in Delaware thus are they are defined as a US person under 760.1(b) of the Export Administration Regulations (EAR). From 2009-2013 Coty Middle East engaged in transactions involving the sale and/or transfer of goods or services from the US to Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Oman, Pakistan, Qatar, Saudi Arabia, Syria, UAE, and Yemen, activities in the interstate or foreign commerce of the United States. In connection with these activities Coty Middle East furnished the following statement 70 times:  “WE HEREBY CERTIFY…. THAT ABOVE MENTIONED GOODS DO NOT CONTAIN ANY MATERIAL OF ISRAEL ORIGIN…”

View Order: https://efoia.bis.doc.gov/index.php/documents/antiboycott/alleged-antiboycott-violations-2015/1083-a748/file

Save a Stamp…File Boycott- Related Requests Online Now

Tuesday, November 15th, 2016 by Danielle McClellan

2016/11/15

By: Danielle McClellan

Effective October 14, 2016 BIS has amended the EAR to permit electronic submission as an additional method available to US person for reporting requests they receive to take certain actions in furtherance or support of an unsanctioned foreign boycott.  The amendments are basically administrative changes to the EAR to permit electronic filing as opposed to only mail filings.

Prior to this rule, § 760.5(b)(4) and (5) of the EAR required United States persons to prepare reports of boycott- related requests on form BIS 621–P (single transaction) or on form BIS 6051–P (multiple transactions), both available on-line through the Office of Antiboycott Compliance (OAC) page of the BIS Web site (OAC Web page) in a fillable PDF format, and to submit the reports in duplicate paper copy to OAC postmarked by the last day of the month following the calendar quarter in which the request was received (or, if received outside the United States, by the last day of the second month following the calendar quarter in which the request was received).

While United States persons may continue to submit paper reports by mail consistent with §760.5(b)(4)— (b)(7), this final rule amends the EAR to allow submission of reports electronically, with the same deadlines, through the OAC Web page.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-10-14/pdf/2016-24831.pdf

Information on both paper and electronic submissions is available through the OAC Web page at https://www.bis.doc.gov/index.php/enforcement/%20oac?id=300

USML Categories VIII, XII, and XV Amended and Some Items Shifting to CCL

Tuesday, November 15th, 2016 by Danielle McClellan

2016/11/15

The Department of State has published a final rule that will be effective December 31, 2016 that will revise Category XII (fire control, laser, imaging, and guidance equipment) of the U.S. Munitions List (USML) to remove certain items from control on the USML and to describe more precisely the articles continuing to warrant control on the USML. The Department of State also amends USML Categories VIII, XIII, and XV to reflect that items previously described in those Categories are now controlled under the revised Category XII or Commerce Control List. Further, the Department revises USML Category XI to move items to the CCL as a result of changes to related control in USML Category XII. The Export Administration Regulations (EAR) amends Export Control Classification Number (ECCN) 7A611 and creates a new ‘‘600 series’’ ECCNs 7B611, 7D611, and 7E611. In addition, for certain dual-use infrared detection items, this final rule expands controls for certain software and technology, eliminates the use of some license exceptions, revises licensing policy, and expands license requirements for certain transactions involving military end users or foreign military commodities. This final rule also harmonizes provisions within the EAR by revising controls related to certain quartz rate sensors.

ITAR Changes Below:

Section 121.1 is amended by:

  • Removing and reserving paragraph (e) in U.S. Munitions List Category VIII;
  • Revising paragraphs (a)(3)(ii) and (a)(10) of U.S. Munitions List Category XI;
  • Revising U.S. Munitions List Category XII; Removing and reserving paragraph (a) in U.S. Munitions List Category XIII; and
  • Removing and reserving paragraph (c) in U.S. Munitions List Category XV

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-10-12/pdf/2016-24225.pdf

 

EAR Changes Below:

  • Part 734
    • Section 734.4 is amended by removing and reserving paragraph (a)(3) and revising paragraph (a)(5).
  • Part 740
    • Section 740.2 is amended by adding paragraph (a)(7) and removing and reserving paragraph (a)(9).
    • Section 740.16 is amended by revising paragraphs (a)(2) and (b)(1) through (3)
    • Section 740.20 is amended by revising paragraphs (b)(2)(ii) and (b)(2)(x)
  • Part 742
    • Section 742.6 is amended by revising paragraph (b)(1)
  • Part 744
    • Section 744.9 is amended by revising the section heading and paragraphs (a) and (b)
  • Part 772
    • Section 772.1 is amended by revising the last sentence in Note 1 to the definition of ‘‘specially designed’’
  • Part 774
    • In Supplement No. 1 to part 774, Category 0, ECCN 0A919 is amended by revising the Items paragraph of the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 0, ECCN 0A987 is amended by:
      • Revising the Related Controls paragraph in the List of Items Controlled section;
      • Revising paragraph f. in the Items paragraph in the List of Items Controlled section; and
      • Adding a note to 0A987.f
    • In Supplement No. 1 to part 774, Category 2, ECCN 2A984 is amended by revising the heading and Note 1 of the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A002 is amended by:
    • Removing the ‘‘Special Conditions for STA’’ section; and
    • Revising the Related Controls paragraph in the List of Items Controlled section.
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A003 is amended by:
      • Adding a License Requirement Note in the License Requirements section;
      • Revising notes 3 and 4 in the Related Controls paragraph in the List of Items Controlled section; and
      • Adding note 5 to the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A004 is amended by revising the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A005 is amended by revising the last two sentences in the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A007 is amended by revising the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A008 is amended by revising the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A107 is amended by revising the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A611 is revised
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A990 is revised
    • In Supplement No. 1 to part 774, Category 6, ECCN 6A993 is amended by revising the Related Controls paragraph in the List of Items Controlled sectionn Supplement No. 1 to part 774, Category 6, ECCN 6D002 is amended by revising the TSR paragraph in the List Based License Exceptions section and the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6D003 is amended by revising the TSR paragraph in the List Based License Exceptions section and the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6D991 is revised
    • In Supplement No. 1 to part 774, Category 6, ECCN 6E001 is amended by revising the TSR paragraph in the List Based License Exceptions section and the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, ECCN 6E002 is amended by revising the TSR paragraph in the List Based License Exceptions section and the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 6, The following ECCNs will be amended by revising the Related Controls paragraph in the List of Items Controlled section
      • ECCN 6E990
      • ECCN 7A001
      • ECCN 7A002
      • ECCN 7A003
      • ECCN 7A005
      • ECCN 7A101
      • ECCN 7A102
    • In Supplement No. 1 to part 774, Category 7, ECCN 7A611 is revised
    • In Supplement No. 1 to part 774, Category 7, ECCN 7A994 is revised
    • In Supplement No. 1 to part 774, Category 7, add ECCN 7B611 between ECCNs 7B103 and 7B994
    • In Supplement No. 1 to part 774, Category 7, add ECCN 7D611 between ECCNs 7D103 and 7D994
    • In Supplement No. 1 to part 774, Category 7, add ECCN 7E611 between ECCNs 7E104 and 7E994
    • In Supplement No. 1 to part 774, Category 7, ECCN 7E994 is amended by revising the Related Controls paragraphin the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 8, ECCN 8A002 is amended by adding a sentence to the end of the Related Controls paragraph in the List of Items Controlled section
    • In Supplement No. 1 to part 774, Category 9, ECCN 9A991 is amended by:
      • Removing the License Requirement Notes paragraph in the License Requirements section, and
      • Revising the Related Controls paragraph in the List of Items Controlled section.

Federal Register: https://www.gpo.gov/fdsys/pkg/FR-2016-10-12/pdf/2016-24220.pdf

Want a more detailed overview of these regulation changes? Our Export Control Reform for USML Category XII: Fire Control, Laser, Imaging, and Guidance Webinar will cover the following:

  • Significant changes to USML Category XII and corresponding revisions to Categories VIII, XI, XIII, and XV, which will result in some items moving off the USML
  • What the definition of “specially designed” really means for classification purposes, and how Category XII has introduced a new concept of “specially designed for a military end-user”
  • How to classify formerly ITAR-controlled items on the Commerce Control List, especially the new and revised “600 series” Export Control Classification Numbers (ECCNs) (7A611, 7B611, 7D611, and 7E611)
  • Adjustments to several related non-600 series ECCNs is CCL Categories 0, 2, 6, 7, 8, and 9
  • License exception eligibility for these items, including important changes to License Exceptions APR, GOV, and STA
  • Revisions to unique EAR military end use and end user controls
  • The actions exporters should take now to prepare for the rapidly approaching effective date of these changes

Learn More at: http://www.learnexportcompliance.com/Webinars/Export-Control-Reform-for-USML-Category-XII-Fire-C.aspx

The Last Hoorah for Reform?

Tuesday, September 6th, 2016 by Danielle McClellan

2016/09/06

By: Danielle McClellan

Over three years ago (April 2013) the first set of Export Control Reform regulations were published in the Federal Register, they were over 100 pages long and made the regulations more complex but also significantly relaxed controls on some items. Over the last few years reform has come in the form of waves and moved items from the USML onto the CCL in batches. Now, as the Obama Administration is moving out it looks as though we are about to see the last list shift for a while.

The final rule, which will be effective December 31, 2016, will move specific items controlled under Category XIV and Category XVIII. Basically, items that have been determined to no longer warrant ITAR control (toxicological agents, including chemical agents, biological agents, and associated equipment, along with directed energy weapons) will be controlled under the Commerce Control List (CCL). The affected Category XIV items consist of dissemination, detection, and protection “equipment” and related articles, such as production and test “equipment,” and will be controlled under new ECCNs 1A607, 1B607, 1C607, 1D607 and 1E607. The affected Category XVIII articles will follow in suit with being primarily tooling, production “equipment,” test and evaluation “equipment,” test models, and related articles and will be controlled under new ECCNs 6B619, 6D619, and 6E619.

Specific Regulation Changes:

ITAR:

  • This final rule adopts for those pathogens and toxins that meet specific capabilities listed in paragraph (b) the ‘‘Tier 1’’ pathogens and toxins established in the Department of Health and Human Services and the United States Department of Agriculture select agents and toxins regulations (42 CFR part 73 and 9 CFR part 121). The Tier 1 pathogens and toxins that do not meet these capabilities remain controlled in Export Control Classification Number (ECCN) 1C351 on the CCL.
  • Additionally, this rule, in concert with the analogous rule published by the Department of Commerce, moves riot control agents to the export jurisdiction of the Department of Commerce, as well as the articles covered previously in paragraphs (j), (k), and (l), which include test facilities, equipment for the destruction of chemical and biological agents, and tooling for production of articles in paragraph (f), respectively.
  • Other changes include the addition of paragraph (a)(5) to control chemical warfare agents ‘‘adapted for use in war’’ and not elsewhere enumerated, as well as the removal of paragraphs (f)(3) and (f)(6) and movement to the CCL of equipment for the sample collection and decontamination or remediation of chemical agents and biological agents.
  • Paragraph (f)(5) for collective protection was removed and partially combined in paragraph (f)(4) or the CCL.
  • Paragraph (g) enumerates antibodies, recombinant protective antigens, polynucleotides, biopolymers, or biocatalysts exclusively funded by a Department of Defense contract for detection of the biological agents listed in paragraph (b)(1)(ii).
  • The Department notes that the controls in paragraph (f)(2) that include the phrase ‘‘developed under a Department of Defense contract or other funding authorization’’ do not apply when the Department of Defense acts solely as a servicing agency for a contract on behalf of another agency of the U.S. government. Moreover, ‘‘other funding authorization’’ refers to other funding authorization from the Department of Defense.
  • The Department notes that the controls in paragraphs (g)(1) and (h) that include the phrase ‘‘exclusively funded by a Department of Defense contract’’ do not apply when the Department of Defense acts solely as a servicing agency for a contract on behalf of another agency of the U.S. government, or, for example, in cases where the Department of Defense provides initial funding for the development of an item but another agency of the U.S. government provides funding to further develop or adapt the item.
  • Paragraph (h) enumerates certain vaccines funded exclusively by the Department of Defense, as well as certain vaccines controlled in (h)(4) that are specially designed for the sole purpose of protecting against biological agents and biologically derived substances identified in (b). Thus, the scope of vaccines controlled in (h)(4) is circumscribed by the nature of funding and the satisfaction of the term ‘‘specially designed’’ as that term is defined in ITAR § 120.41. In evaluating the scope of this control, please note that the Department offers a decision tool to aid exporters in determining whether a defense article meets the definition of ‘‘specially designed.’’ This tool is available at http://www.pmddtc.state.gov/licensing/dtSpeciallyDesigned.htm.
  • Paragraph (i) is updated to provide better clarity on the scope of the control by including examples of Department of Defense tools that are used to determine or estimate potential effects of chemical or biological weapons strikes and incidents in order to plan to mitigate their impacts.
  • A new paragraph (x) has been added to USML Category XIV, allowing ITAR licensing on behalf of the Department of Commerce for commodities, software, and technology subject to the EAR, provided those commodities, software, and technology are to be used in or with defense articles controlled in USML Category XIV and are described in the purchase documentation submitted with the application. The intent of paragraph (x) is not to impose ITAR jurisdiction on commodities, software, and technology subject to EAR controls. Items described in paragraph (x) remain subject to the jurisdiction of the EAR. The Department added the paragraph as a regulatory reference point in response to industry requests to be able to use a Department of State license to export shipments that have a mix of ITAR controlled items and EAR controlled items for use in or with items described in that category.
  • Finally, this rule establishes USML control in subparagraph (f)(2) of certain chemical or biological agent equipment only when it contains reagents, algorithms, coefficients, software, libraries, spectral databases, or alarm set point levels developed under a Department of Defense contract or other funding authorization.

EAR:

This final rule creates five new “600 series” ECCNs in CCL Category 1 (ECCNs 1A607, 1B607, 1C607, 1D607, and 1E607) that clarify the EAR controls applicable to certain dissemination, detection and protection “equipment” and related items that the President has determined no longer warrant control under USML Category XIV. Terms such as “part,” “component” “accessories,” “attachments,” and “specially designed” are applied in the same manner in this rule as those terms are defined in Section 772.1 of the EAR. In addition, to assist exporters in determining the control status of their items, a “Specially Designed” Decision Tool and a CCL Order of Review Decision Tool are available on the BIS Web site at: http://www.bis.doc.gov/index.php/decision-tree-tools.

  • New ECCN 1A607 Military dissemination “equipment” for riot control agents, military detection and protection “equipment” for toxicological agents (including chemical, biological, and riot control agents), and related commodities. In new ECCN 1A607, paragraphs .a through .d, paragraph .i, and paragraphs .l through .w are reserved. Paragraph .e of ECCN 1A607 controls “equipment” “specially designed” for military use and for the dissemination of any of the riot control agents controlled in ECCN 1C607.a. Paragraph .f of ECCN 1A607 controls protection “equipment” “specially designed” for military use and for defense against either materials controlled by USML Category XIV(a) or (b) or any of the riot control agents in new ECCN 1C607.a. Paragraph .g of ECCN 1A607 controls decontamination “equipment” not controlled by USML Category XIV(f) that is “specially designed” for military use and for the decontamination of objects contaminated with materials controlled by USML Category XIV(a) or (b). Paragraph .h controls “equipment” not controlled by USML Category XIV(f) that is “specially designed” for military use and for the detection or identification of either materials specified by USML Category XIV(a) or (b) or riot control agents controlled by new ECCN 1C607.a. Paragraph .j controls “equipment” “specially designed” to: (i) Interface with a detector, shelter, vehicle, vessel, or aircraft controlled by the USML or a “600 series” ECCN; and (ii) collect and process samples of articles controlled in USML Category XIV(a) or (b). Paragraph .k controls medical countermeasures that are “specially designed” for military use (including pre- and post- treatments, antidotes, and medical diagnostics) and “specially designed” to counter chemical agents controlled by USML Category XIV(a). Paragraph .x controls “parts,” “components,” “accessories,” and “attachments” that are “specially designed” for a commodity controlled under ECCN 1A607.e, .f, .g, .h, or .j or a defense article controlled in USML Category XIV(f) and that are not enumerated or otherwise described elsewhere in the USML.
  • New ECCN 1B607 Military test, inspection, and production “equipment” and related commodities “specially designed” for the “development,” “production,” repair, overhaul, or refurbishing of commodities identified in ECCN 1A607 or 1C607, or defense articles enumerated or otherwise described in USML Category XIV.
  • In new ECCN 1B607, paragraph .a controls “equipment,” not including incinerators, that is “specially designed” for the destruction of chemical agents controlled by USML Category XIV(a). Paragraph .b of ECCN 1B607 controls test facilities and “equipment” that are “specially designed” for military certification, qualification, or testing of commodities controlled by new ECCN 1A607.e, .f, .g, .h, or .j or by USML Category XIV(f), except for XIV(f)(1). Paragraph .c of ECCN 1B607 controls tooling and “equipment” “specially designed” for the “development,” “production,” repair, overhaul, or refurbishing of commodities controlled under new ECCN 1A607.e, .f, .g, .h, or .j or USML Category XIV(f). Paragraphs .d through .w are reserved. Paragraph .x controls “parts,” “components,” “accessories,” and “attachments,” not enumerated or otherwise described elsewhere in the USML, that are “specially designed” for a commodity controlled by ECCN 1B607.b or .c or for a defense article controlled by USML Category XIV(f). As indicated above, ECCN 1B607.b does not control test facilities and “equipment” that are “specially designed” for military certification, qualification, or testing of commodities and are enumerated or otherwise described in USML Category XIV(f)(1), as set forth in State’s companion rule to this final rule (e.g., see the equipment in USML Category XIV(f)(1)(ii) that is “specially designed” for testing the articles controlled in paragraph (a), (b), (c), (e), or (f)(4) of USML Category XIV). In addition to the test facilities and “equipment” controlled by ECCN 1B607.b, see the tooling and “equipment” classified under ECCN 2B350 or 2B352 for producing the chemical/biological agents, precursors, or defoliants described in USML Category XIV(a), (b), (c), or (e). The EAR also control tooling and “equipment” to produce the antibodies/polynucleotides and vaccines described in USML Category XIV(g) and (h), respectively, as follows: lab “equipment” designated as EAR99 under the EAR; biological dual-use “equipment” (including protective “equipment”) classified under ECCN 2B352; and EAR-controlled biological systems for making vaccines (involving the use of mice, rabbits, etc.).
  • New ECCN 1C607?Tear gases, riot control agents and materials for the detection and decontamination of chemical warfare agents. New ECCN 1C607.a controls specified tear gases and riot control agents. Paragraph .b of ECCN 1C607 controls “biopolymers” not controlled by USML Category XIV(g) that are “specially designed” or processed for the detection or identification of chemical warfare (CW) agents specified by USML Category XIV(a) and the cultures of specific cells used to produce them. Paragraph .c controls specified “biocatalysts” and biological systems that are not controlled by USML Category XIV(g) and are “specially designed” for the decontamination or degradation of CW agents specified by USML Category XIV(a). Paragraph .d controls chemical mixtures not controlled by USML Category XIV(f) that are “specially designed” for military use for the decontamination of objects contaminated with materials specified by USML Category XIV(a) or (b).
  • New ECCN 1D607?“Software” “specially designed” for the “development,” “production,” operation, or maintenance of items controlled by 1A607, 1B607 or 1C607. New ECCN 1D607.a controls “software” “specially designed” for the “development,” “production,” operation, or maintenance of items controlled by ECCN 1A607, 1B607 or 1C607. Paragraph .b of ECCN 1D607 is reserved.
  • New ECCN 1E607?“Technology” “required” for the “development,” “production,” operation, installation, maintenance, repair, overhaul, or refurbishing of items controlled by ECCN 1A607, 1B607, 1C607, or 1D607. New ECCN 1E607.a controls “technology” “required” for the “development,” “production,” operation, installation, maintenance, repair, overhaul, or refurbishing of items controlled by ECCN 1A607, 1B607, 1C607, or 1D607. Paragraph .b of ECCN 1E607 is reserved.
  • Amendments to License Exceptions BAG and TMP related to Individual Protection “Equipment” in ECCN 1A607.f. This final rule amends the License Exception BAG provisions in Section 740.14(h) of the EAR to authorize exports, reexports, or in-country transfers of chemical or biological agent protective gear consistent with the requirements and restrictions described therein. In a corresponding change, this final rule also amends the License Exception TMP provisions in Section 740.9(a)(11) of the EAR to authorize temporary exports, reexports, or in-country transfers of chemical or biological agent protective gear consistent with the requirements and restrictions described therein. The amendments to License Exceptions BAG and TMP also change the requirements for Afghanistan to be consistent with those of the majority of other Country Group D:5 destinations (i.e., the U.S. person authorized to use the license exception must be affiliated with the U.S. Government and be traveling on official business or traveling in support of a U.S. Government contract). The same requirement applies to the use of these license exception provisions for Iraq, also a D:5 country, with the additional option that the U.S. person must be traveling to Iraq under a direct authorization by the Government of Iraq and engaging in activities for, on behalf of, or at the request of, the Government of Iraq. These amendments are also intended to ensure that the scope of these license exceptions, as they apply to chemical or biological agent protective gear controlled under new ECCN 1A607.f, conforms with the scope of the ITAR exemption for personal protective equipment in Section 123.17 of the ITAR (e.g., by correcting the provisions for Afghanistan, as described above, to be consistent with those of the majority of other Country Group D:5 destinations).

BIS Renews Temporary Denial Order for Mahan Airways, Skyco and Many Others

Tuesday, August 9th, 2016 by Danielle McClellan

2016/08/09

On July 7, 2016 BIS extended the Temporary Denial Order (TDO) on the basis of preventing an imminent violation of the EAR for 180 days for the following entities:

  • Mahan Airways
  • Pjman Mahmood Kosarayanifard
  • Mahmoud Amini, Kerman Aviation
  • Sirjanco Trading LLC
  • Ali Eslamian
  • Mahan Air Gernal Trading LLC
  • Skyco (UK) Ltd.
  • Equipco (UK) Ltd.
  • Mehdi Bahrami
  • Al Naser Airlines
  • Ali Abdullah Alhay
  • Bahar Safwa General Tradeing
  • Sky Blue Bird Group
  • Issam Shammout

Order: https://efoia.bis.doc.gov/index.php/component/docman/doc_download/1069-e2467?Itemid=

Successful Violations for Dummies: Don’t Fly to the US when Attempting to Arrange Illegal Exports

Friday, May 27th, 2016 by Danielle McClellan

2016/05/27

New Zealand Man Arrested in Seattle After Contacting Undercover Agent

By: Danielle McClellan

William Ali, a New Zealand man has been indicted in Seattle on federal charges that he attempted to purchase aircraft parts in the US that he planned to sell to a client in China. Last year Ali contacted a US company looking for “aircraft parts called accelerometers.” These parts are developed for low or zero gravity navigation systems used in spacecraft and aircraft and any one selling the items must have an export license (Ali did not).

A Homeland Security agent began to investigate Ali shortly after he contacted the company looking to purchase the accelerometers. The agent and Ali exchanged emails and Ali admitted that he knew there were controls on the sale of the items that he was looking to buy and that trying to buy them was turning out to be difficult. He also explained that he didn’t think he could get an export license for the parts so he was trying to purchase them through different sources. His client was looking for a “huge quantity” of the product because they were “manufacturing a variant of the MA60 aircraft and needed high-quality US parts” according to the criminal complaint.

After considering all of his options, Ali flew to Seattle to pick up the pars where he was arrested when he arrived on April 11, 2016.

More Details: http://www.seattletimes.com/seattle-news/crime/new-zealand-man-faces-illegal-export-charges-in-seattle/

Export Control Reform Is Not Dead

Friday, May 27th, 2016 by Danielle McClellan

2016/05/27

By: John Black

Maybe you were beginning to feel comfortable with the sweeping changes to US export controls resulting from the Obama Administration’s Export Control Reform Initiative.   Well, the regulatory change party isn’t over.  Get out your reading glasses and free up some time in your calendar because it won’t be long before the EAR-ITAR definitions clean-up regulations hit the street.  In 2015, DDTC and BIS published proposed, so-called harmonization rules to harmonize EAR and ITAR definitions of terms such as export, publicly available/public domain and others.  At first glance I thought the proposed EAR and ITAR rules were not harmonization because they proposed to have different definitions of many key terms.  Then the musicians in my family reminded me that when two people sing harmony they do not sing the same note at the same time but they sing different notes at the same time.  So I guess the proposal to have definitions in harmony was musically correct because the definitions were not the same.

It’s easier for me to talk about the rules as definitions clean up, updates or clarifications, or perhaps just changes.  In any event, putting aside the name I prefer to use, this is a high level overview of what I/we should expect:

  • Clarifications of the EAR definitions of export (something leaves the US), reexport (something goes from one foreign country to another) and retransfer (change in end-use or end-user).
  • Stating in the EAR that a person’s country status under the EAR deemed export rule is the most recent country of citizenship or permanent resident status.
  • If technical data, technology or software is electronically transmitted or moved using end-to-end encryption, and is not intended for storage in the most sensitive export control countries such as China, Russia, and arms-embargoed countries, it is not an unauthorized export if electronic transmissions transit countries for which the a license would be required for the content of the transmission.
  • The EAR will include provisions to apply the ITAR 126.18 and 124.16 concepts to EAR deemed reexports of technology or source code.  Deemed reexports from Country Group A:5 STA eligible countries to nationals of any of those A:5 countries will be authorized.  Deemed EAR reexports involving other countries and nationals will be authorized along the lines of ITAR 126.18 which means the deemed reexporter has an NDA from the recipient, a compliance procedure to vet/control the deemed reexport and there is no substantive contact with problem countries.
  • The EAR will include provisions to apply ITAR special arrangements involving countries such as Canada, the UK and Australia to EAR issues.
  • The EAR will require that the license applicant inform all other parties in the license of the license scope and conditions.
  • The EAR will clarify that technology that is an input into a fundamental research is not fundamental research.

To a large extent, the definition changes will merely clarify that the definitions mean what you thought they meant, which will increase your confidence in your understanding of the regulations and, hopefully, make it easier for you to explain and apply the rules in your organization, and perhaps help you to sleep better at night.  Clarification, even without hope for changes to the restrictions and requirements, is something I always appreciate because for me it is always better to understand the rules than to agree with them.

In any event, once the new changes are out, it will be time to join me as I print out the Federal Register notices, get some small sticky notes and a couple highlighter pens, pour yourself a big cup of coffee, and start to read the notices, including the preamble text, and study the new rules.  I am looking forward to it, and I hope you are too.

It’s Pho Real! Obama Lifts US Arms Embargo on Vietnam

Friday, May 27th, 2016 by Danielle McClellan

2016/05/27

By: John Black

During his visit to Vietnam, President Obama announced that the US was lifting its long standing arms embargo on Vietnam.   While this may not result in an immediate flood of US weapons to Vietnam, it paves the way for US exporters and foreign companies who sell US military items to seek new, yet perhaps relatively modest, business opportunities in Vietnam.

On May 23, 2016, the Department of State’s Directorate of Defense Trade Controls announced is it ending its policy prohibiting the sale or transfer of lethal weapons to Vietnam.   DDTC said it will review on case-by-case basis applications for licenses to export or temporarily import defense articles and defense services to or from Vietnam under the International Traffic in Arms Regulations (ITAR). DDTC will soon publish a rule in the Federal Register to implement a conforming change to ITAR §126.1.

While the US Commerce Department’s Bureau of Industry and Security (BIS) has not yet officially announced it will make corresponding changes to the Export Administration Regulations (EAR) to remove the EAR/ ITAR-lite arms embargo on Vietnam, it is reasonable to assume that BIS will do so in approximately the same “soon” timeframe as DDTC’s ITAR change.

“The decision to lift the ban was not based on China… but on our desire to complete what has been a lengthy process moving towards normalization with Vietnam,” Obama said at a joint press conference alongside his Vietnamese counterpart President Tran Dai Quang.   A casual observer like me, however, cannot help but think that to a certain extent this US action is intended to send a clear symbolic, and perhaps tangible, signal to China in response to China’s recent empire expanding actions in the South China Sea including, for example, building a military air base on the Spratly Islands, which most of the world do not recognize to be Chinese territory.

Vietnam’s economy has been growing at an impressive rate compared to other countries in the region in recent years as it has begun to be a low cost manufacturing source that is taking some manufacturing opportunities away from China as Chinese manufacturing costs increase.  According to the latest CIA statistics, Vietnam has the 36th highest GDP in the world and its industrial production growth rate of 7.5% is the 15th highest in the world.  This is not to say that Vietnam soon will be cranking out  a high volume of low cost ITAR and EAR controlled military parts as it becomes a regional military manufacturing powerhouse.  It is unlikely that the US Government is prepared to approve the transfer of technology for the production of sophisticated military items to Vietnam anytime soon and equally unlikely that Vietnam has the capability to do so.  Nonetheless, this shift in US-Vietnam economic relations removes the US arms embargo as a cloud hanging over trade between the two countries and is another step in improving US-Vietnam relations.  Certainly too, some extent this enhances Vietnams status in the region.

North Korean Ruler Kim Jong-un was unavailable for comment.

BIS Amends EAR and Updates Six ECCNs for MTCR Annex

Thursday, May 5th, 2016 by Danielle McClellan

2016/05/05

By: Danielle McClellan

On April 4, 2016 The Bureau of Industry and Security published a final rule to reflect changes to the Missile Technology Control Regime (MTCR) Annex that were agreed on by MTCR member countries in October 2015. The following changes have been published:

  • In § 742.5 (Missile technology), this final rule adds a new paragraph (b)(3), and redesignates paragraphs (b)(3) and (b)(4), as paragraphs (b)(4) and (b)(5). This paragraph specifies that BIS licenses for MT controlled items also authorize the minimum ‘‘software’’ and ‘‘technology’’ for MT controlled items authorized under the same license, unless such minimum ‘‘software’’ and ‘‘technology’’ are specifically excluded by BIS on the license.
  • This final rule also amends § 750.7(c)(1), which identifies ‘‘non-material changes [to a license that] do not require submission of a ‘Replacement’ license or any other notification to BIS.’’ BIS has determined that a license applicant who does not seek a license for minimum ‘‘software’’ or ‘‘technology’’ for an MT controlled item need not seek a ‘‘Replacement’’ license if the applicant subsequently wishes to export such software or technology under the authority of the previously issued license.
  • Accordingly, in this rule BIS establishes a new paragraph (c)(1)(x) to § 750.7 that applies to all MT licenses, except when a condition is placed on the license that excludes such minimum ‘‘software’’ and ‘‘technology.’’ These changes are also consistent with the boilerplate text on BIS licenses, because the § 750.7(c)(1)(x) revision identifies the export, reexport or transfer (in-country) of minimum necessary MT controlled software and technology as a non-material change to a license.
  • BIS makes this change to MT licensing policy to be consistent with the MTCR Annex General Minimum Software Note and the MTCR Annex General Technology Note that specify that a license for MT controlled items should also authorize certain minimum ‘‘software’’ and ‘‘technology,’’ which is being implemented by adding paragraph (c)(1)(x) to § 750.7 (which allows licensees to make such exports, reexports and transfers (in-country) pursuant to licenses for MT items) and paragraph (b)(3) to § 742.5 (which specifies this MT licensing policy) of the EAR.
  • The MTCR General Minimum Software Note, MTCR Annex General Technology Note, and the provisions this final rule adds to § 742.5 are consistent with the General Software Note and General Technology Note in Supplement No. 2 to part 774 and License Exception TSU under § 740.13, paragraphs (a) and (c). Note, however, that the implementation of these provisions is being done through the MT licensing policy, and the addition of paragraph (c)(1)(x) to § 750.7 described below, instead of through the use of a license exception.
  • This final rule also specifies in § 742.5, paragraph (b)(3) that a license for MT controlled items authorizes pursuant to § 750.7(c)(1)(x) the later export (or reexport, or transfer (in- country) as applicable) of ‘‘software’’ controlled for MT reasons intended to correct defects (bug fixes) in a previously legally exported item under a BIS license to the same ultimate consignee(s) and end user(s) specified on the license, provided that the capability and/or performance of the item are not otherwise enhanced and such ‘‘software’’ is not excluded from the license by a BIS condition on the license.
  • Lastly, for the changes to § 742.5, this final rule adds a Note to paragraph (b)(3) to clarify that for the limited number of ECCNs that are identified in § 740.2, paragraph (a)(5), License Exception TSU is available, and therefore exporters do not need to apply for a license from BIS for such minimum ‘‘software’’ or ‘‘technology.’’
  • In § 750.7(c) (Changes to the license), this rule adds a new paragraph (c)(1)(x), as referenced above in the description of the changes this final rule makes to § 742.5. This paragraph (c)(1)(x) specifies that the export, reexport or transfer (in-country) of missile technology (MT) controlled minimum ‘‘software’’ and/or ‘‘technology’’ permitted pursuant to the missile technology licensing policy in § 742.5(b)(3) does not require a new license.
  • This final rule also includes a parenthetical phrase in § 750.7(c)(1)(x) to cross reference § 742.5(b)(3)(i) to define the scope of eligible minimum ‘‘software’’ and ‘‘technology’’ and other limitations for licenses for MT controlled items.
  • Also in § 750.7, this final rule adds two notes to paragraph (c)(1)(x). The new Note 1 provides context for why BIS is implementing the MT licensing policy pursuant to § 750.7(c)(1)(x). Note 1 explains that the MT licensing policy is being implemented pursuant to paragraph (c)(1)(x) because it applies to all MT licenses. This new Note 1 also explains that this MT licensing policy does not apply when BIS places a condition on the specific license(s) which excludes the use of paragraph (c)(1)(x).
  • This final rule also adds a Note 2 to paragraph (c)(1)(x) to provide guidance on the relationship between License Exception TSU and § 750.7(c)(1)(x), as well as § 742.5(b)(3). Note 2 is the same as the Note to paragraph (b)(3) to § 742.5, described above in this final rule, except for minor changes to reflect that the note is in § 750.7.
  • This final rule amends ECCN 1B101 by revising paragraph a and the introductory text of paragraph b in the List of Items Controlled section. (MTCR Annex Change, Category II: Item 6.B.1.a. and b., Bern 2015 TEM). Specifically, this final rule amends paragraph a to revise the term ‘fiber- placement machines’ to add the term ‘‘/tow’’ after the term ‘‘fiber’’ to clarify that the scope of the control parameter extends to placement machines regardless of whether they are named fiber-placement machines or tow- placement machines.
    • This final rule revises the term ‘‘fiber-placement machines’’ to ‘‘fiber/tow-placement machines’’ in order to clarify that both these similar machines (two types of placement machines) are classified under this control parameter, regardless of the naming convention.
    • This final rule revises paragraph b to add single quotation marks around the term ‘tape- laying machines’ to indicate that this term is defined for purposes of ECCN 1B101.
    • This final rule also revises paragraph b to remove the phrase ‘‘and sheets,’’ because it is no longer needed as part of the control parameter because the definition of tape now encompasses sheets. Lastly, this final rule adds four new Technical Notes to paragraphs a and b. The addition of these four Technical Notes provides a cleartechnical definition for ‘fiber/tow- placement machines’ and ‘tape-laying machines’ under new Technical Note 1, which is based on the minimum width of material that these machines are capable of laying (as specified further in the new Technical Notes 3 and 4 this final rule adds to ECCN 1B101).
    • This final rule also adds a Technical Note 2 to provide an ECCN-specific definition of ‘filament band,’ which is also used as part of the definition of ‘fiber/tow- placement machines’ and ‘tape-laying machines.’ The purpose of this change to ECCN 1B101 is to more clearly define and differentiate between fiber/tow- placement machines and tape-laying machines.
  • This final rule amends ECCN 1C111 by revising paragraphs b.4, b.9, d.9, and d.12 in the List of Items Controlled section to add CAS (Chemical Abstract Service) Numbers. 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 these ‘‘items’’ paragraphs of 1C111.
    • This final rule revises paragraph b.4 to add the CAS Number (CAS 25265– 19–4/CAS 68891–50–9) after the material ‘‘polybutadiene acrylic acid acrylonitrile (PBAN).’’ (MTCR Annex Change, Category II: Item 4.C.5.e., otterdam 2015 Plenary).
    • This final rule revises paragraph d.9 to add the CAS Number (CAS 6068– 98–0) after the material ‘‘ethylene dihydrazine.’’ (MTCR Annex Change, Category II: Item 4.C.2.b.8., Rotterdam 2015 Plenary).
    • This final rule revises paragraph d.12 to add the material ‘‘1,1- Dimethylhydrazinium azide (CAS 227955–52–4),’’ which is an alternative structure of the same chemical (Dimethylhydrazinium azide) classified under d.12. This final rule also revises paragraph d.12 to add ‘‘1,2-’’ before the material ‘‘Dimethylhydrazinium azide’’ and adds the CAS Number (CAS 299177–50–7) after the material ‘‘1,2- Dimethylhydrazinium azide.’
    • Lastly, for the changes to ECCN 1C111, this final rule revises paragraph d.19, to add the material ‘‘1,1- Diethylhydrazine nitrate (DEHN),’’ which is an alternative structure of the same chemical (Diethylhydrazine nitrate (DEHN)) classified under d.19.
    • This final rule also revises paragraph d.19 to add ‘‘1,2-’’ before the material ‘‘Diethylhydrazine nitrate (DEHN)’’ and adds the CAS Number (CAS 363453– 17–2) after the material ‘‘1,2- Dimethylhydrazinium nitrate.’’
  • This final rule amends ECCN 7A116 to revise the heading to add the term ‘‘pneumatic’’ to the beginning of the control parameter to specify that pneumatic flight control systems are also controlled under ECCN 7A116. In addition, this final rule adds the phrase ‘‘and fly-by-light’’ to the parenthetical phrase ‘‘(including fly-by- wire systems)’’ to specify that the flight control systems classified under this ECCN include fly-by-wire and fly-by- light systems. (MTCR Annex Change, Category II: Item 10.A.1., Rotterdam 2015 Plenary).
  • This final rule amends ECCN 9A012 by adding paragraph b.5 in the List of Items Controlled section to control pneumatic, hydraulic, mechanical, electro-optical, or electromechanical flight control systems (including fly-by-wire and fly-by-light systems) and attitude control equipment designed or modified for UAVs or drones controlled by ECCN 9A012, and capable of delivering at least 500 kilograms payload to a range of at least 300 km. (MTCR Annex Change, Category II: Item 10.A.1., Rotterdam 2015 Plenary). New paragraph b.5 is not intended to control UAVs or drones controlled by either USML paragraph VIII(a) or ECCN 9A610.a.
  • This final rule also makes two conforming changes to ECCN 9A012 for the addition of paragraph 9A012.b.5. Specifically, this final rule is revising the ‘‘MT’’ paragraph in the License Requirements section to add an MT control for the new paragraph 9A012.b.5.
  • This final rule is revising the Related Control Paragraph to include a reference to also see ECCN 9A610, because as noted above, similar types of systems and equipment are controlled under ECCN 9A610.w
  • This final rule amends ECCN 9A610 by revising paragraph w in the List of Items Controlled section to add the term ‘‘pneumatic’’ to the beginning of the control parameter to specify that pneumatic flight control systems are also classified under this paragraph w.
    • In addition, this final rule adds the phrase ‘‘and fly-by-light’’ to the parenthetical phrase ‘‘(including fly-by- wire systems)’’ to specify that the flight control systems classified under this paragraph w include fly-by-wire and fly- by-light systems. (MTCR Annex Change, Category II: Item 10.A.1., Rotterdam 2015 Plenary).
  • This final rule amends ECCN 9B106 by revising paragraphs a.1 and the introductory text of paragraph a.2 in the List of Items Controlled section. The introductory text of paragraph previously referred to both paragraphs a.1 and a.2 as flight conditions, which was not entirely accurate.
    • Therefore, this final rule revises the introductory text of paragraph a by removing the phrase ‘‘simulating all of the following flight conditions’’ and adding in its place the phrase ‘‘having all of the following characteristics.’’ (MTCR Annex Change, Category II: Item 15.B.4.a., Bern 2015 TEM). The altitude and temperature requirements specified in paragraphs a.1.a and a.2.a are flight conditions, but the incorporation or ability to incorporate a shaker unit or other vibration test equipment specified in paragraph a.2 is not strictly a flight condition, but a means of simulating a flight condition, so the introductory text of paragraph a needed to be updated for clarity. This clarification to the introductory text of paragraph a reflects the way this control has previously been interpreted by BIS.
    • This final rule revises the control parameter in paragraph a.1.b to clarify the temperature range goes from below ¥50° C to above 125° C.
    • The revision to paragraph a.1.b does not change the scope of control of 9B610 and this revision will better reflect the control text of the MTCR Annex. (MTCR Annex Change, Category II: Item 15.B.4.a.1.b., Conforming Change to MTCR Annex).

 

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 April 4, 2016, 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 May 4, 2016. Any such items not actually exported or reexported before midnight, on May 4, 2016, require a license in accordance with this rule.

Federal Register Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-04-04/pdf/2016-07601.pdf