BIS Suspends Authorization VEU Eligibility for Certain Companies in China and India

The Bureau of Industry and Security (BIS) published a notice in today's Federal Register amending the Export Administration Regulations (EAR) to suspend the Authorization Validated End-User (VEU) status of Aviza Technology China and GE Fanuc Systems PVT Ltd. in India.

BIS is suspending the availability of Authorization VEU for exports, reexports, and in-country transfers to these two facilities due to material changes at the companies and not due to any prohibited activities by the two companies.

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Senate Passes Bill Extending GSP and ATPA Programs; Bill to be Sent to President for Signature

This evening the U.S. Senate approved by unanimous consent H.R. 4284, legislation that will extend the Generalized System of Preferences (GSP) and Andean Trade Preference Act (ATPA) duty preference programs until December 31, 2010.

 

H.R. 4284 will now be sent to President Obama for his signature and the GSP/ATPA extensions will be enacted into law.

 

This is good news for U.S. importers of products eligible for GSP and ATPA benefits since the products will continue to enter duty free without interruption.

 

Tthe U.S. Congress is expected to consider changes to the GSP and other trade preferences programs in 2010.

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Seasons Greetings From International Trade Law News

Season's Greetings and Happy New Year to all of our loyal readers from around the world. See you in 2010.

And in the spirit of the holiday season we have reprinted below Tyler Brown's A Harmonized (Tariff) Christmas.

—Doug Jacobson

A Harmonized (Tariff) Christmas

By Tyler Brown, Sr. Export Technical Representative, Office of  Export Compliance, Jet Propulsion Laboratory (reprinted with permission)

For this analysis, we assumed that the Lords, Ladies, maids, and entertainers are not performing defense services.  Articles and material would appear to all be EAR99.  Dealing only with the associated hardware, I propose the following HTS designations:

• Twelve drummers drumming: 9206.00.20 00 - Percussion musical instruments (for example, drums, xylophones, cymbals, castanets, maracas): Drums
• Eleven pipers piping: 9205.90.20.60 - Woodwind instruments:  Flutes and piccolos (except bamboo)
• Ten lords a-leaping: Since there are no hereditary Lords in the U.S., the Country of Origin of the Lords would need to be specified, and the leaping activity subjected to an analysis as to whether it constitutes a defense service.
• Nine ladies dancing: See above.
• Eight maids a-milking: Given a modern interpretation: 8434.10.00.00 - Milking machines and dairy machinery, and parts thereof: Milking machines
• Seven swans a-swimming: 0106.39.00.00 - Birds: Other 
• Six geese a-laying: (Assume the geese weigh over 185 gms.) 0105.99.00.00 - Live poultry of the following kinds: Chickens, ducks, geese, turkeys and guineas: Other, Other
  
• Five golden rings: Note: 9. For the purposes of heading 7113, the expression "articles of jewelry" means: (a) Any small objects of personal adornment (for example, rings, bracelets, necklaces, broaches, earnings, watch chains, fobs, pendants, tie pins, cuff links, dress studs, religious or other medals and insignia); 7113.19.50.00 - Of other precious metal, whether or not plated or clad with precious metal: Other, other.
  
•  Four calling birds: Today when people sing that song they usually sing about calling birds. But actually many years ago they sang the song's old English words. They sang about colly, or collie, birds. Colly or collie means black, according to the British Broadcasting Corporation. It comes from an old word for coal. Wikipedia pins down colly bird even more: to the European blackbird. Common in parks and cities in Europe, it looks like a dusky version of its cousin, the American robin. Both belong to the thrush family. Like all thrushes, they sing (or call) beautifully.  0106.39.00.00 - Birds: Other
• Three French hens: Live poultry of the following kinds: Chickens, ducks, geese, turkeys and guineas: Chickens, Weighing not more than 185 g: 0105.11.00; Breeding stock, whether or not purebred: 10 Layer-type (egg-type), 20 Broiler-type (meat-type), 40 Other; Chickens, Weighing more than 185 g: 0105.94.00.00  (We actually spent some time worrying about whether the "French Hens" might be a re-export...)
• Two turtle doves: 0106.39.00.00 - Birds: Other
• A partridge in a pear tree: 0106.39.00.00 - Birds: Other;  0602.20.00.00 - Trees, shrubs and bushes, grafted or not, of kinds which bear edible fruit or nuts.
  
  And remember, any Christmas ornamentation falls under 9505.10: Festive, carnival, or other entertainment articles, including magic tricks and practical joke articles; parts and accessories thereof: Articles for Christmas festivities and parts and accessories thereof.

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International Trade Law News Twitter Updates for week of 12/12/09 to 12/19/09

@Reuters: U.S. contract worker detained in Cuba: report http://link.reuters.com/ved56g

@BreakingNews: U.S. secretly froze more than $2 billion allegedly held for Iran in Citigroup accounts in 2008 - http://bit.ly/8zCjsq

Newsweek: Obama Administration intends to target 'dozens' of IRGC front companies in effort to squeeze Iran http://bit.ly/8hJF9z

Dallas Morning News: Federal agents in Dallas ground helicopter believed to be destinedfor Iran via Italy -- http://bit.ly/5b3F2I

Reuters: Germany probes technology shipments to Iran -- http://bit.ly/53k4O2

FDA debars Virginia man convited of importing catfish from Vietnam with false labels to avoid antidumping duties: http://bit.ly/6aVyC3

State Dep't requests Senate to delay consideration of Comprehensive Iran Sanctions, Accountability and Divestment Act 2009 (S.2799)

Politico: U.S. sentences Iranian lured in sting to 5 years http://bit.ly/5yBNBW

U.S. House of Representatives just passed H.R. 4284, legislation to extend expiring GSP and ATPA programs until December 31, 2010.

RT @anticorruption: TI welcomes new EU mandate to fight corruption http://bit.ly/5KnxLO

Politico: New information in case of a USAID subcontractor who was detained in Cuba on December 5. http://bit.ly/65VnNK

Politico: Rep. Berman says Iran sanctions bill empowers Obama Iran policy and will not force its hand -- http://bit.ly/7avunX

DOJ: Virginia exec charged with conspiring to bribe former Panamanian government officials for maritime contract--http://bit.ly/6Ce7FY

@Politico- Twitter diplomacy: U.S. to relax certain software sanctions rules for Iran -- http://bit.ly/6fDwBQ

DOJ: Credit Suisse forfeits $536 million for violating IEEPA & New York law for transactions with Iran, Sudan, etc. http://bit.ly/7npTaq

RT @Ethical_Corp - Op/Ed: Facilitation Payments: A business integrity officer’s perspective... http://bit.ly/6towKk

Ways and Means Trade Subcommittee Chairman Levin (D-MI) and Ranking Member Brady (R-TX) have introduced the Miscellaneous Tariff Bill of 2009.

Politico: U.S. moves to isolate Iran from banks (more on Credit Suisse and sanctions)-- http://bit.ly/6aKzU3

NYT: Questions on Security Mar Foreign Investments (discusses CFIUS issues involving Virgin Galactic and other cases) http://bit.ly/7a6zpK

RT @complianceweek: More on OECD's complaints about facilitation payments allowed under Foreign Corrupt Practices Act. http://bit.ly/5hI6hZ

Aviation Week Editorial: Ratify Export Treaties With U.K., Australia http://bit.ly/8t2q0V

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Kevin Wolf Nominated as Assistant Secretary of Commerce for Export Administration

Today President Obama nominated Kevin Wolf, a partner in the Washington, D.C. office of Bryan Cave LLP, to be Assistant Secretary of Commerce for Export Administration. Since joining that firm in 1993 Kevin's practice has focused on export controls and economic sanctions matters.

Kevin is the last of the three political appointees named to the Bureau of Industry and Security's (BIS) senior leadership team.

On September 11, 2009, Eric Hirschorn was nominated to serve as Under Secretary of Commerce for Export Administration and head of BIS. The Senate Banking Committee today approved Mr. Hirschorn's nomination and he now awaits confirmation from the full Senate.

David Mills was nominated to serve as Assistant Secretary of Commerce for Export Enforcement on December 2, 2009.

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State Department Recommends that OFAC Issue General License Authorizing Personal Communications to be Exported to Iran

Yesterday the State Department submitted a notification to Congress pursuant to the Iran-Iraq Arms Non-Proliferation Act of 1992 indicating that it is recommending that the Department of the Treasury's Office of Foreign Assets Control (OFAC) issue a general license that would authorize downloads of free mass market software to Iran for personal communications and/or sharing of information over the Internet, such as instant messaging, chat and e-mail and social networking.

The notification indicated that U.S. sanctions are having "an unintended chilling effect on the ability of companies . . to provide essential communications tools to ordinary Iranians."  It also indicated the general license "would be comparable to exemptions which already exist for the exchange of direct mails and phone calls." Any general license would exclude the direct or indirect exportation of services or software where there is knowledge or reason to know that it is intended for the Government of Iran.

The general license that will be issued by OFAC will be the third general license issued by OFAC under the Iranian Transactions Regulations, the regulations that govern U.S. sanctions on Iran. Unlike a specific license which is issued on a case-by-case to authorize a specific transaction, a general license authorizes the performance of certain categories of transactions without having to submit a license application to OFAC.

Once OFAC issues the general license, which will should occur early next year, it should negate the need for Congress to enact the Iranian Digital Empowerment Act ("IDEA Act") (H.R.4301) that was introduced earlier this week.

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U.S. House of Representatives Passes One-Year Extension of GSP and ATPA Trade Preference Programs

This afternoon the U.S. House of Representatives passed H.R. 4284, legislation to extend the expiring Generalized System of Preferences (GSP) and the Andean Trade Preferences Act (ATPA) trade preference programs until December 31, 2010.

The debate on the House floor made clear that the House intends to consider GSP and other trade preference reform in 2010.

The bill now moves to the Senate where supporters hope the bill will be considered before the Christmas recess.

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Congressman Moran Introduces Iranian Digital Empowerment Act

Today, Representative Jim Moran (D-VA) introduced in the U.S. Congress the Iranian Digital Empowerment Act ("IDEA Act") (H.R.4301), legislation that would clarify current sanctions law to provide the Iranian people access to information and the ability to communicate both internally and with the outside world in an effort to undermine censorship and monitoring efforts by the Iranian government.

The bill is intended to permit Twitter, Facebook and other types of instant messaging services to be used in Iran.

“Due to our outdated laws governing information sharing, U.S. sanctions have had the unintended consequence of denying the Iranian people the tools necessary to advance democracy,” said the Congressman. “This is a classic case of the law lagging behind the pace of technology. Given the tectonic shifts in Iranian society following the fraudulent national elections and emboldened democracy movement that rose from it, we need to move fast to make these sanctions smarter and more relevant to current technology.”

The IDEA Act is intended to clarify the intent of current sanctions law and enable the Iranian people to bypass the Iranian government’s online spying and censorship. The bill authorizes the provision of certain software and related services to Iran, specifically:

• Software and related services that allow private Iranian citizens to circumvent online censorship and monitoring efforts imposed by the Government of Iran; and

• Software and related services that enable personal communication by the Iranian people.

Representatives Bob Inglis (R-SC) and Bill Delahunt (D-MA) are original sponsors of the bill.

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Iranian Arms Procurement Agent Sentenced to 5 Years in Prison

The Philadelphia Inquirer reports on today's sentencing of an Iranian arms procurement agent who was extradited to the United States in 2008 and pled guilty to negotiating the purchase of a number of items on the USML that were destined to Iran:

Under heavy security, an Iranian engineer targeted by Philadelphia-based U.S. Homeland Security agents during an undercover sting in Eastern Europe was sentenced to five years in prison today for trying to buy radar and avionics technology for the Iranian military.

Amir Hossein Ardebili of Sharaz, Iraq had pleaded guilty in federal court in Wilmington to conspiracy, money laundering, munitions export laws and violating the American arms embargo that prohibits most trade with Iran.

Ardebili's arrest in Tbilisi, Georgia in October 2007, his extradition to the United States in January 2008 and his guilty plea in Wilmington in May 2008 were kept secret until early this month. The case remained sealed, U.S. officials said, so that U.S. agents could quietly pursue leads gleaned from Ardebili's laptop computer, which was seized following his arrest in Tbilisi.

Before the sentence was imposed today, Ardebili read a long statement aloud in court, crying often – once so hard that he needed to take a break. He admitted that he broke American law, but begged the judge to consider that he did so in Iran, where his actions where not illegal.

"I don't want to minimize the things I did," said Ardebili, 35. "I'm sorry and I'm looking for your mercy."

U.S. District Court Judge Gregory M. Sleet said that Ardebili "presents somewhat of a paradox" – "motivated by profit and you might say greed" to obtain weapons that may "pose a threat to the national security of the United States.".

Click here for more information on this case, including the indictment and sentencing memorandum.

Update: See Politico story on this case, which discusses some other interesting aspects of this case, here. 

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Women In International Trade to Hold Encryption Export Controls Program in Washington, DC on December 15th

Tomorrow, December 15th, the organization Women In International Trade (WITT) will be holding a program on U.S. Controls on Exports and Reexports of Encryption Products featuring a speaker from the Bureau of Industry and Security.

The discussion will focus on the regulatory changes implemented by the “Encryption Simplification Rule” issued by BIS in October 2008 and other changes involving export controls on encryption software and products.

The program if free for WIIT members and $10 for non-members. Click here for more information and to register for the program.

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Weekend Roundup of Export Controls and Sanctions News

• Crew of cargo plane from North Korea detained in Thailand denies knowledge that they were transporting Arms

• German authorities are investigating shipments of high technology to Iran to see if they may have violated export control laws
  

• Federal agents in Dallas have grounded a helicopter that they say Italian aircraft brokers were planning to ship from North Texas to Iran in violation of U.S. trade sanctions.
  
  
• Obama Administration intends to target 'dozens' of IRGC front companies in effort to squeeze Iran 

• Obama’s Enforcer: The president's patience with Iran has worn thin. That's where Stuart Levey—rhymes with 'heavy'—comes in.
  

U.S. secretly froze more than $2 billion allegedly held for Iran in Citigroup accounts in 2008 

• American subcontractor arrested in Cuba for apparently handing out computers and telecom equipment 

• House of Representatives schedule to vote on bipartisan Iran sanctions legislation that targets companies supplying Iran with gasoline or helping the country expand its refining system
  

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International Trade Law News Twitter Updates for week of 12/5/09 to 12/11/09

Summary of International Trade Law News Twitter Updates (@tradelawnews) for Week of 12/5/09 to 12/11/09:

Laura Rozen in Politico: How unilateral U.S. sanctions on Iran may backfire: http://is.gd/5exYz (discusses recent simulation at Harvard)

WashPost "Friendlier Obama tune on Cuba brings musical detente" http://is.gd/5f8MV (Cuban musicians being granted visas to perform in U.S.)

New Blog Post: BIS Publishes Final Rule Amending EAR and CCL to Implement Changes Made by 2008 Wassenaar Plenary: O... http://bit.ly/4t8xlX

New Blog Post: Presentations from 2009 National District Export Council Conference Posted Online: The PowerPoint pr... http://bit.ly/5ccFNi

New Blog Post: U.S. Business Community's Principles for Comprehensive U.S. Export Control Reform Outlined: In a spe... http://bit.ly/7N32Me

Ambassador Kirk and Secretary Locke welcome new strategic framework with Turkey: http://is.gd/5fXiw

LATimes: China turns to Madison Avenue for an image makeover (discusses China's Made in China TV ad campaign) http://is.gd/5g2oo

U.S. Customs & Border Protection's annual Trade Symposium started today in DC. Presentations found here: http://is.gd/5gdVH #CBP

New Blog Post: DHS Secretary Napolitano Announces the Creation of New Center to Ensure the Safety of Imported Goods... http://bit.ly/5Zp331

New Blog Post: Today Marks International Anti-Corruption Day: Today, December 9th, marks International Anti-Corru... http://bit.ly/7jbnkk

New Blog Post: House Subcommittee to Hold Iran Sanctions Hearing Next Tuesday: The House Committee on Oversight an... http://bit.ly/7AdgLw

New Blog Post: Incoterms Update: Next Version of Incoterms Scheduled to Take Effect on January 1, 2011: Here is the... http://bit.ly/7pLGWq

New Blog Post: Politico: Iran Links U.S. Hikers Case to Detained Iranians: A story by Laura Rozen posted on Politic... http://bit.ly/76DOg1

RT @tradelawyer: Canada marks anti-corruption day http://ow.ly/Kt1Q 2 dedicated RCMP units but little action under Corruption Act

Efforts to renew GSP and other trade preference programs that expire on 12/31 still underway in Congress. Stay tuned.

New Blog Post: OECD Recommends That Facilitating Payments Be Prohibited or Discouraged http://is.gd/5hZGz #FCPA

New Blog Post: BIS Publishes Rule Making Editorial Changes to Commerce Control List: The Commerce Department's Bure... http://bit.ly/64BXGb

New Blog Post: Wassenaar Arrangement on Export Controls Modifies Control Lists at Recent Plenary Session: Last week... http://bit.ly/5KtTwe

Reuters: U.S. protests China's "innovation" rule and antidumping duties levied on U.S. steel products - http://is.gd/5iWO3

BIS, DDTC & other testimony from yesterday's House hearing on aerospace export controls can be found here: http://is.gd/5iYL3

Senator Kerry announced today he plans to move forward with ratification of US Defense Trade Cooperation Treaties with U.K. & Australia

Testimony & statements at today's Senate Foreign Relations hearing on Defense Trade Treaties with U.K. & Australia here: http://is.gd/5iZoW

Presentations from this week's Customs & Border Protection Symposium here: http://bit.ly/7UD1Br

Remarks by Acting Commissioner Ahern at this week's Customs & Border Protection Symposium here: http://bit.ly/7UD1Br

New Blog Post: BIS Publishes Final Rule Implement Changes to CCL Resulting From 2008 Wassenaar Plenary: Today the B... http://bit.ly/6YirF6

Op/Ed in TheStreet.com by PR Exec: When it comes to the FCPA "Lead or go to Jail" --http://bit.ly/5aaEYJ

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National Association of Manufacturers Outlines Export Control Reform Recommendations

The National Association of Manufacturers (NAM) yesterday sent a letter to National Security Advisor General James Jones and National Economic Advisor Lawrence Summers outlining the following eight recommendations for the President’s pending review of U.S. export controls:

1. Improving the Licensing System and Increasing Transparency
2. Providing Greater Assessments of Foreign Availability
3. Reviewing and Restructuring Encryption Rules and Policy
4. Conducting a Systematic Review of the Commerce Control List
5. Promoting Greater Multilateral Cooperation with our Friends and Allies
6. Enhancing the Commerce Department’s Role in the Commodity Jurisdiction Process
7. Improving Outreach Cooperation on Enforcement
8. Improving Outreach to and Resources for Small and Medium-sized Manufacturers

The detailed version of the NAM export control reform recommendations can be found here.

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BIS Publishes Final Rule Implement Changes to CCL Resulting From 2008 Wassenaar Plenary

Today the Bureau of Industry and Security published a final rule in the Federal Register amending the Export Administration Regulations (EAR) and Commerce Control List (CCL) to implement changes made to the Wassenaar Arrangement's List of Dual Use Goods and Technologies (Wassenaar List) agreed upon at the December 2008 Wassenaar Arrangement Plenary Meeting.

See our post earlier this week for more details on the implications of this final rule to exporters.

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BIS Publishes Rule Making Editorial Changes to Commerce Control List

The Commerce Department's Bureau of Industry and Security (BIS) published a final rule in today's Federal Register modifying the Commerce Control List to implement the 2007 and 2008 changes made by the Wassenaar Arrangement Task Force on Editorial Issues (TFEI) that had not been made in any prior rule issued by BIS.

These changes, which are editorial and not substantive in nature, clarify, remove extraneous text or correct text that appears in the Wassenaar Dual-Use List and affect a large number of ECCNs.

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OECD Recommends That Facilitating Payments Be Prohibited or Discouraged

In connection with the marking of December 9th as International Anti-Corruption Day (see previous post) and the 10th Anniversary of the Entry into Force of the Organization of Economic Cooperation and Development (OECD) Anti-Bribery Convention, the OECD held a program yesterday in Geneva, Switzerland on anti-bribery efforts that included some high level speeches by a number of U.S. officials, including Secretary of State Clinton and Commerce Department Locke.

One of the main features of the program was the release of the OECD’s new Recommendation for Further Combating Bribery of Foreign Public Officials which, among other things, recommends that OECD member countries prohibit or discourage the use of small facilitation payments.

Specifically, the OECD recommendation is as follows:

RECOMMENDS, in view of the corrosive effect of small facilitation payments, particularly on sustainable economic development and the rule of law that Member countries should:

i. undertake to periodically review their policies and approach on small facilitation payments in order to effectively combat the phenomenon;

ii. encourage companies to prohibit or discourage the use of small facilitation payments in internal company controls, ethics and compliance programmes or measures, recognising that such payments are generally illegal in the countries where they are made, and must in all cases be accurately accounted for in such companies’ books and financial records.

URGES all countries to raise awareness of their public officials on their domestic bribery and solicitation laws with a view to stopping the solicitation and acceptance of small facilitation payments.

Of course, this is only a recommendation and any changes in law must be implemented by OECD member countries. Nevertheless, this OECD statement is an important one and it will be interesting to see how the U.S. Government will react to this recommendation. At a minimum, it reaffirms the position that companies must closely review their policies regarding facilitating payments.

Some of the other OECD recommendations include:

• Ensuring companies cannot avoid sanctions by using agents and intermediaries to bribe for them;
• Improve co-operation between countries on foreign bribery investigations and the seizure, confiscation and recovery of the proceeds of transnational bribery;
• Provide effective channels for reporting foreign bribery to law enforcement authorities and for protecting whistleblowers from retaliation; and
• Working more closely with the private sector to adopt more stringent internal controls, ethics and compliance programs and measures to prevent and detect bribery.

Secretary Clinton’s remarks made at the OECD program can be found here.

Secretary Locke’s remarks can be found here.

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Politico: Iran Links U.S. Hikers Case to Iranians Detained in U.S.

A story by Laura Rozen posted on Politico today describes how Iran has apparently linked the release of the three American hikers detained in Iran since July to the release of several Iranian nationals being held in the U.S. on various charges, including violating U.S. export controls and sanctions laws. The article states:

Among those eleven names on the list, are eight Iranians who appear to have been charged with violating arms export control laws and taken into custody in the US, UK, France, Germany and Canada. The indictment against one of those men, Amir Hossen Ardebili, was only unsealed by the Justice Department last week, though he has been in US custody since early 2008, pled guilty in May 2008, and is serving time in a Philadelphia federal prison.

The article further notes that: 

 . . .if the list correlates with the one being presented behind closed doors, it would be disturbing that Iran is seemingly drawing an “equivalence” between the three young hikers who accidentally wandered into Iran, and arms dealers seeking to procure US weapons technology prohibited from being sent to Iran, US officials said.

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Incoterms Update: Next Version of Incoterms Scheduled to Take Effect on January 1, 2011

Here is the latest update on the status of the revisions currently underway to Incoterms 2000.

The Incoterms Drafting Committee recently met to consider the latest draft of the revised version of Incoterms. Several more meetings will be held with a goal of issuing the final version of the revised Incoterms in the fall of 2010. At this point, the goal is to have the revised version of Incoterms go into effect internationally on January 1, 2011.

The next version of Incoterms is likely to be known as Incoterms 2010 (not Incoterms 3000 or Incoterms 2011 as initially proposed and reported).

As we previously noted, a few of the current 13 Incoterms in Incoterms 2000 are likely to be eliminated and there may be at least one new Incoterm.

In order to prepare for 2011 implementation of the revised Incoterms, the United States Council for International Business will provide a number of Incoterms 2011 training programs starting in the fall of 2010.

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House Subcommittee to Hold Iran Sanctions Hearing Next Tuesday

The House Committee on Oversight and Government Reform's Subcommittee on National Security and Foreign Affairs, chaired by Rep. John Tierney (D-MA), has announced that it will hold a hearing entitled, “Iran Sanctions: Options, Opportunities, and Consequences.” Witnesses will be by invitation only and have not yet been announced.

This hearing will examine the effectiveness of sanctions against Iran, explore additional diplomatic alternatives, and discuss the consequences, both intended and unintended, that new sanctions could create. The hearing will feature experts on sanctions implementation, Iran’s foreign and domestic politics, and options for U.S. engagement.

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Today Marks International Anti-Corruption Day

Today, December 9th, marks International Anti-Corruption Day. The theme of this year's International Anti-Corruption Day is "Don't let corruption kill development."

In order to promote the United Nations' anti-corruption campaign, the U.N.'s Office of Drugs and Crime (UNODC) has produced the following 60 second video that promotes the power to say no when confronted with bribery.

In addition, Dow Jones today released a State of Anti-Corruption Compliance Survey that found more than half of all companies are delaying or abandoning key business initiatives as executives struggle to both interpret a patch-work of anti-corruption regulations and collect the information they need to confidently assess corruption risk.

U.N. Secretary-General Ban Ki-moon's message to mark International Anti-Corruption Day 2009 is below:

Message on International Anti-Corruption Day

The theme of this year's observance of the International Anti-Corruption Day -- "don't let corruption kill development" - highlights one of the biggest impediments to the world's efforts to reach the Millennium Development Goals.

When public money is stolen for private gain, it means fewer resources to build schools, hospitals, roads and water treatment facilities. When foreign aid is diverted into private bank accounts, major infrastructure projects come to a halt.  Corruption enables fake or substandard medicines to be dumped on the market, and hazardous waste to be dumped in landfill sites and in oceans.  The vulnerable suffer first and worst.

But corruption is not some vast impersonal force. It is the result of personal decisions, most often motivated by greed.

Development is not the only casualty. Corruption steals elections. It undermines the rule of law. And it can jeopardize security. As we have seen over the last year, it can also have a serious impact on the international financial system.

Fortunately, there is a way to fight back.  The United Nations Convention against Corruption is the world's strongest legal instrument to build integrity and fight corruption. A new mechanism decided on at the recent Conference of States Parties in Doha means that, from now on, states will be judged by the actions they take to fight corruption, not just the promises they make.

The private sector should not lag behind governments. Businesses must also prevent corruption within their ranks, and keep bribery out of tendering and procurement processes. I urge the private sector to adopt anti-corruption measures in line with the UN Convention.  Companies -- particularly those that subscribe to the 10^th principle of the Global Compact, to work against corruption -- should pledge not to cheat and should open themselves up to peer review to ensure that everyone is playing by the same rules.

We all have a part to play. On International Corruption Day 2009, I urge all people to join the UN anti-corruption campaign at www.yournocounts.org.  And I encourage everyone to make a pledge: never to offer or accept a bribe. Live by that motto, and the world will be a more honest place - and we will increase the chances of reaching the Millennium Development Goal.

 This message is also available in Arabic, Chinese, French, Spanish and Russian.

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DHS Secretary Napolitano Announces Creation of New Center to Ensure Safety of Imported Goods

Department of Homeland Security Secretary Janet Napolitano today announced the creation of the Import Safety Commercial Targeting and Analysis Center (CTAC)—a new U.S. Customs and Border Protection (CBP) facility designed to streamline and enhance federal efforts to address import safety issues.

The Import Safety CTAC will combine the resources and manpower of CBP and other government agencies—including U.S. Immigration and Customs Enforcement, the Consumer Product Safety Commission, the Food and Drug Administration and the Food Safety Inspection Service—to protect the American public from harm caused by unsafe imported products by improving communication and information-sharing and reducing redundant inspection activities.

The new facility, which will be headed by and located adjacent to CBP's Office of International Trade in Washington, DC, reflects the three core principles announced by President Obama's Food Safety Working Group in July: prevention, surveillance and response. Created in March, the Working Group was tasked with advising President Obama on how to upgrade the U.S. food safety system.

Approximately 30 personnel, representing all of the participating agencies, will work at the CTAC.

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Wassenaar Arrangement on Export Controls Modifies Control Lists at Recent Plenary Session

Last week the Wassenaar Arrangement (WA) on Export Controls for Conventional Arms and Dual-Use Goods and Technologies held its 15th annual Plenary session in Vienna, Austria.

During the Plenary the participating countries agreed to a number of changes to the WA's List of Dual-Use Goods and Technologies and the Munitions List. The changes to the List of Dual-Use Goods and Technologies included the modification of a number of entries on the control lists (including changes in parameters and specifications), the addition and changes to several notes, as well as other changes to the text that were intended to make the lists more "user-friendly" for exporters and licensing authorities.

Among the more significant changes is a new Note 4 to Category 5 - Part 2 of the Dual-Use List, the category that covers information security and encryption. The new note indicates that Category 5–Part 2 does not apply to items incorporating or using "cryptography" and meeting all of the following:

a. The primary function or set of functions is not any of the following:
1. "Information security";
2. A computer, including operating systems, parts and components therefor;
3. Sending, receiving or storing information (except in support of entertainment, mass commercial broadcasts, digital rights management or medical records management); or
4. Networking (includes operation, administration, management and provisioning);
b. The cryptographic functionality is limited to supporting their primary function or set of functions; and
c. When necessary, details of the items are accessible and will be provided, upon request, to the appropriate authority in the exporter’s country in order to ascertain compliance with conditions described in paragraphs a. and b. above.

Because the U.S. is a participating member of the WA, the U.S. must modify the Commerce Control List (CCL) in order to incorporate these changes. However, as indicated by our previous post regarding the changes made at the 2008 WA Plenary, the changes made at the 2009 Plenary will not take effect until the CCL is modified by the Bureau of Industry and Security (BIS) next year.

The next regular Wassenaar Arrangement Plenary meeting will take place in Vienna in December 2010.

A summary of changes adopted at the December 2009 Plenary can be found here.

The latest version of the List of Dual-Use Goods and Technologies and the Munitions List incorporating the made at last week's Plenary can be found here.

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U.S. Business Community's Principles for Comprehensive U.S. Export Control Reform Outlined

In a speech at the Practising Law Institute's annual "Coping with U.S. Export Controls" conference in Washington, DC, National Foreign Trade Council (NFTC) President Bill Reinsch today outlined the business community's principles for reforming the U.S. export control system to enhance national security and economic competitiveness. Reinsch, a former Under Secretary of Commerce for Export Administration in the Clinton Administration, also discussed current efforts by the Administration and Congress to reform the outdated system, noting, "for the first time in 20 years, prospects for reform are realistic."

"That reform is overdue is one of the biggest understatements of our time. The EAA has not been amended since 1987. There has not been major control list revision since 1994. The always-controversial encryption regulations have now gone ten years without major change. Meanwhile, the world has been changing rapidly," said Reinsch. "First, our adversaries are now diffuse and not always nation-states...Second, the pace of technology change is accelerating, and the line between civilian and military is fast eroding...Third, and perhaps most important, the nature of the global market has changed dramatically. In the good old days, an export was an export. You made it here and shipped it over there in a box. Now we are in the era of global supply chains."

"From a security point of view, knowledge and technology matter more than the box, because it is the key not only to our national security but also to our economic competitiveness. It should be clear from all these developments that controlling exports is harder than it ever was, and the burden on our policy makers and enforcement officials much greater. In fact, it forces them to radically rethink our policy," he continued.

After making the case for reform, Reinsch outlined the business community's key principles for reform, developed by the Coalition for Security and Competitiveness, a group of companies and associations representing aerospace and high tech companies, and the Export Control Working Group, composed of many of the same companies, practitioners and seasoned compliance experts. The principles recommend that any reform effort should draw clear lines of agency responsibility and ensure accountability; pursue controls and enforcement in partnership with the business community rather than as adversaries; keep pace with technology change and the development of global supply chains by revising and reducing control lists; enhance cooperation with our allies and rely on multilateral controls; and complete the transition to an end user based system by developing procedures for trusted end users and exporters.

In addition, Reinsch pointed out that the "higher fences around a smaller number of items" concept should play a key role in the development of the reforms, and that the reform "process needs to be based on a constantly updated understanding of technology changes here in the United States and overseas." While not advocating radical reorganization of the interagency process, Reinsch stated that the "process for making commodity jurisdiction decisions must be regularized," and that "in order to improve allied cooperation, we need to take the multilateral regimes seriously."

He also endorsed the prompt implementation of a number of thoughtful proposals made over the past year or two – the intracompany transfer, expansion of the Validated End User program, project licenses for munitions exports, Secretary Locke's proposal to eliminate licensing requirements for NATO and other allies, and proposals for expedited treatment for trusted end users.

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Presentations from 2009 National District Export Council Conference Posted Online

The PowerPoint presentations from the 2009 National District Export Council (DEC) Conference that was held in Washington, DC from November 3-5 have now been posted on the DEC Conference's website here.

The 2010 DEC Conference will be held in Detroit, Michigan and Windsor, Ontario from October 24 - 27, 2010.

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BIS to Publish Final Rule Amending EAR and CCL to Implement Changes Made by 2008 Wassenaar Plenary

On Friday, December 11, 2009, the Bureau of Industry and Security (BIS) will publish a final rule in the Federal Register amending the Export Administration Regulations (EAR)  to implement changes made to the Wassenaar Arrangement's List of Dual Use Goods and Technologies (Wassenaar List) agreed upon at the December 2008 Wassenaar Arrangement Plenary Meeting.

While the final rule adds only one new Export Control Classification Number (ECCN) to the Commerce Control List (CCL), ECCN 1A008, changes were made to a number of ECCNs, including ECCNs 1A001, 1A002, 1A003, 1A004, 1A007, 1A008, 1B001, 1B003, 1C008 1C010, 1D003, 1E001, 1E002, 2A983, 3A001, 3A002, 3B001, 4D001, 4D003, 4E001, 5A001, 5B001, 5D001, 5E001, 5A002, 5B002, 5D002, 5E002, 6A001, 6A004, 6A005, 6A006, 6A008, 6A996, 6D003, 6E993, 7A003, 8A001, 8A002 and 9A012.

The final rule also imposes new or expanded National Security (NS) Column 1 controls, NS Column 2 controls and anti-terrorism (AT) controls on certain ECCNs.

The final rule also revises certain definitions in the EAR, by adding the terms: “Bias (accelerometer)” and “Personalized smart card”, removing the term “Noise Level” and adding the terms “Explosives”, “Fusible” and “personal area network.”

The final rule also removes and adds some reporting requirements. 

BIS noted in the final rule that changes made by the Wassenaar Arrangement to ECCNs 6A002 and 6A003 will be implemented in a separate rule, "because of the sensitivity of the items and complexity of procedures and controls for these items."

A copy of the advance version of the final rule can be found here.

Because of the large number of changes to the CCL made by this final rule exporters should carefully review this notice to determine whether any of the export control requirements applicable to their products have changed.

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International Trade Law News Twitter Updates for Week of 11/30/09 to 12/4/09

Summary of International Trade Law News Twitter Updates (@tradelawnews) for Week of 11/30/09 to 12/4/09:

• At EU-China business summit today, China's Premier urged EU to relax export controls on high-tech products to China: http://is.gd/57LZh
• GAO issues report on DOJ's selection of corporate monitors in deferred prosecution and non-prosecution agreements: http://is.gd/57N8B
• Today marks 10th anniversary of infamous Seattle WTO Ministerial protests. Seattle Times follow-up story here: http://is.gd/56XUw
• In letter to President Obama, U.S. Chamber of Commerce (@chamberpost) advocates modernizing export controls http://is.gd/5agkX
• Presentations from the 2009 BIS Update Conference on Export Controls held earlier this year are now available at http://is.gd/5agrC
• Dallas Morning News: "A tiny Texas plane maker says exports make jobs soar" http://is.gd /5aKWc
• NYT: 6 former Siemens officials agree to pay total of 18 million euros in damages resulting from bribery scandal: http://is.gd/5bh6O
• RT @tradelawyer: Legal Alert - Key Developments in Canadian Trade Controls and Economic Sanctions During 2009 http://ow.ly/IkuG
• BBC News: North Korean designer jeans to go on sale in Sweden http://is.gd/5cmVu
• Follow-up to previous tweet: Goods of North Korean origin may not be imported directly or indirectly to US w/out approval letter from OFAC

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BIS Issues Proposed Rule to Eliminate Paper Export Licenses and Other Export Control Documents

In order to save the government time and money, the Bureau of Industry and Security (BIS) issued a proposed rule in today's Federal Register that would eliminate the use of most paper documents that it sends to parties having business before the agency. The documents that would be affected by this proposed rule include:

• export and reexport licenses,
• notices of denial of license applications, 
• notices of return of a license application without action, 
• classification results, 
• License Exception AGR notification results, and 
• encryption review request results.
  

This proposed rule also would make a number of changs to the Export Administration Regulations to implement these changes, including modifying the recordkeeping requirements associated with the elimination of paper documents. The proposed rule would also exempt parties who submit documents to BIS via the SNAP-R system from requirements to retain copies of documents submitted even though those documents are "export control documents'' as defined in part 772 of the EAR.

Comments on this proposed rule must be received by BIS by February 2, 2010.

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U.S. Customs Posts Materials From Next Week's Customs Symposium

U.S. Customs and Border Protection (CBP) has posted on its website some of the materials that we will be presented during n the breakout sessions at next week's 2009 Trade Symposium.

Among the materials now available for review include information on C-TPAT, antidumping and countervailing duty functionality in ACE, post entry summary corrections in ACE and customs rulings.

For those that cannot attend the sold-out program in person, CBP will be presenting a live webcast of many of the sessions from the Trade Symposium. To view the presentations and for more details on the webcast click here.

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Aerospace Industries Association Members Identify Export Control Reform Initiatives in Letter to President Obama

In a letter sent yesterday to President Obama signed by more than 100 companies, members of the Aerospace Industries Association (AIA) praised the Obama Administration for undertaking the review of U.S. export controls and urged the administration to take action on a number of initiatives to modernize the export control system.

The letter identified the following five areas of reform to improve the export control system that do not require new legislation:

1. Establishment of transparent and specific criteria to identify those militarily critical and sensitive defense and space technologies that must be subject to the most rigorous controls.

2. Facilitation of timely technology flows between the U.S. and our closest allies and partners, particularly in support of defense and national security programs important to the U.S. Government.

3. Adoption of procedures to ensure any required Defense Department reviews associated with a proposed release of U.S. technology properly balance both policy and technical considerations, and are completed in a timely and consistent manner.

4. Update of the treatment of the next-generation of aerospace and defense technologies, such as Unmanned Aircraft Systems (UAS), under U.S. and multilateral export control regimes.

5. Review of export control compliance requirements to improve comprehension and implementation, particularly among small and medium-sized firms, as well as a review of resource requirements to raise confidence in the effectiveness of U.S. enforcement efforts.

The letter also reiterated the need to ratify the defense trade cooperation treaties with the United Kingdom and Australia that are currently pending in the Senate. 

The full text of the AIA's letter can be found here.

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DDTC Adds Sixth National Security Exception to 60-day Licensing Deadline

In a notice published in today's Federal Register, the Directorate of Defense Trade Controls (DDTC) has added a sixth national security exception to the 60-day ITAR licensing determination requirement in National Security Presidential Directive-56 to account for situations involving the review of an established export policy relevant to license applications.

As a result, the following six national security exceptions are applicable to ITAR license applications (number 6 is the new exception):

(1) When a Congressional Notification is required: The Arms Export Control Act Section 36 (c) and (d) and the International Traffic in Arms Regulations, 22 CFR 123.15, requires a certification be provided
to Congress prior to granting any license or other approval for transactions, if it meets the requirements identified for the sale of major defense equipment, manufacture abroad of significant military equipment, defense articles and services, or the re-transfer to other nations. Notification thresholds differ based on the dollar value, countries concerned and defense articles and services.
(2) Required Government Assurances have not been received. These would include, for example, Missile Technology Control Regime Assurances, and Cluster Munitions assurances.
(3) End-use Checks have not been completed. (Commonly referred to as "Blue Lantern'' checks. End-use checks are key to the U.S. Government's prevention of illegal defense exports and technology
transfers, and range from simple contacts to verifying the bona fides of a transaction to physical inspection of an export.)
(4) The Department of Defense has not yet completed its review.
(5) A Waiver of Restrictions is required. (For example, a sanctions waiver.)
(6) When a related export policy is under active review and pending final determination by the Department of State.

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DHS Secretary Napolitano Tells Senate Committee That More Time and Money Needed to Achieve 100% Cargo Screening

The U.S. Senate Committee on Commerce, Science, and Transportation held a full committee hearing today entitled "Transportation Security Challenges Post-9/11" featuring Janet Napolitano Secretary of the Department of Homeland Security (DHS).

In her testimony Secretary Napolitano indicated that DHS will need additional time to meet the 2012 deadline for 100% scanning of inbound containerized maritime cargo as required by the SAFE Port Act of 2006.  Specifically, Secretary Napolitano said:

. . . in order to implement the 100% scanning requirement by the 2012 deadline, DHS would need significant resources for greater manpower and technology, technologies that do not currently exist, and the redesign of many ports. These are all prohibitive challenges that will require the Department to seek the time extensions authorized by law.

Secretary Napolitano noted that "while DHS is pursuing technological solutions to these problems, expanding screening with available technology would slow the flow of commerce and drive up costs to consumers without bringing significant security benefits."  With respect to costs, the Secretary noted that:

the costs of 100% scanning pose a great challenge, particularly in a struggling economy. Deploying SFI-type scanning equipment would cost about $8 million per lane for the more than 2,100 shipping lanes at more than 700 ports around the world that ship to the United States. On top of these initial costs, operating costs would be very high. These include only DHS expenses, not the huge costs that would have to be borne by foreign governments or industry. It is also important to keep in mind that about 86% of the cargo shipped to the United States is sent from only 58 of those more than 700 ports. Installing equipment and placing personnel at all of these ports – even the tiny ones – would strain government resources without a guarantee of
results. 

With respect to 10+2, Secretary Napolitano noted that "progress on 10+2 has been very positive" and "industry participation has been very strong" and DHS has "already received more than 2.8 million filings representing more than 90,000 importers." She also noted that DHS anticipates moving forward with a final 10+2 rule "soon".

Secretary Napolitano also touched on a wide range of other maritime, aviation and surface transportation security issues in her extensive testimony that can be found here (pdf).

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Next NCITD Meeting to Feature Speakers on Incoterms and U.S. Customs Outbound Programs

The next meeting of the National Council on International Trade Development (NCITD) will take place on December 9, 2009 in Washington, DC and will feature the following speakers:

• Frank Reynolds, International Projects and U.S. Delegate to the Incoterms Revision. Topic: Incoterms
  

Robert C. Rawls, Outbound Program Manager, US Customs and Border Protection CBP). Topic: CBP Outbound Programs

• Best Practices Roundtable: Expanding U.S. Compliance Programs Globally
  

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

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Iranian Arms Procurement Agent Pleads Guilty and Will be Sentenced

The U.S. Attorney for the District of Delaware announced today that an Iranian arms procurement agent who was extradited to the United States in 2008 has pled guilty to negotiating the purchase and illegal export of a number of military components to Iran and will be sentenced on December 14, 2009.

According to the indictments, Amir Hossein Ardebili was charged with multiple violations of the Arms Export Control Act, International Emergency Economic Powers Act, smuggling, conspiracy, and money laundering. The charges resulted from a three year international undercover investigation regarding Ardebili’s role as an arms acquisitions agent for the government of Iran. Some of the items that Ardebeli allegedly attempted to procure included:

• QRS-11 Gyro Chip Sensors which are solid-state gyro chips that are used in aircraft, missile, space and commercial applications. The BEI GyroChip Model QRS11 Quartz Rate Sensor, Model No. QRS-11-00300-100, is listed on the United States Munitions List in Category XII(d), and therefore requires a license from the Department of State for export. [Note: certain types of QRS-11 chips are subject to the jurisdiction of the Commerce Department.]

• MAPCGM0003 Phase Shifters. Phase shifters perform a key function in the active radiating elements of electronically steered antennae. They enable an antenna to point a radiated beam in specific directions. Phase shifters have many applications including phased array radar, which is used in military target acquisition and missile guidance.

• Digital Air Data Computer (DADC-107). The DADC-107 is a fully computerized Form/Fit/Function (FFF) replacement for the Central Air Data Computer installed on F-4 fighter aircraft. It calculates flight parameters including altitude, air speed, static pressure, mach number, and true angle of attack. Its high accuracy enhances weapons delivery system performance. The DADC-107 is a United States Munitions List Article under category VIII(h) and therefore requires a United States State Department license for export.

Ardebili’s negotiations with undercover agents culminated in a face-to-face meeting in a Central Asian nation in October of 2007, after which Ardebili was arrested and extradited to the United States.

Documents from this case can be found at the following links:

• Indictment of Amir Hossein Ardebili, a/k/a Amir Akhami, a/k/a Alex Dave
• Government's Sentencing Memorandum 
• Defendant's Motion for Variance From Sentencing Guidelines
  

Update: Thursday's Washington Post contains an interesting story on this case entitled "Cat-and-Mouse Game Traps Arms Broker" with additional details on the scope of the undercover operation that led to Ardebeli's arrest in Tbilisi, Georgia.

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David Mills to be Nominated as Assistant Secretary for Export Enforcement

Reliable sources have confirmed that David Mills will be nominated by President Obama to serve as Assistant Secretary for Export Enforcement.

Mr. Mills, who formerly served as Chief of Licensing at the Treasury Department’s Office of Foreign Assets Control and in the Office of Chief Counsel for Export Adminstration, is currently Of Counsel in the Washington, DC office of the law firm of DLA Piper.

While the Senate Committee on Banking, Housing, and Urban Affairs held a hearing on November 5, 2009 to consider the nomination of Eric Hirschhorn to serve as Under Secretary of Commerce for Export Administration, the Senate has not yet set a date for a confirmation vote.

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BIS Posts Video and Transcripts from 2009 BIS Update Conference

The Bureau of Industry and Security (BIS) has created a web portal with links to the video and written transcripts from several of the presentations made at BIS's Update 2009 Conference on Export Controls and Policy that was held September 30 through October 2, 2009 in Washington, DC.

Among the programs available are presentations on encryption, deemed exports, voluntary disclosures, AES, export enforcement and supply chain. Secretary of Commerce Gary Locke's keynote speech is also available to view or read.

This is a great service for exporters and trade compliance professionals that were unable to make this year's program and for those who attended but were unable to attend a particular presentation.

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DOJ Press Release: Belgian Arms Dealer Pleads Guilty to Conspiracy to Supply U.S. Fighter Jet Engines to Iran

Department of Justice

Office of Public Affairs

FOR IMMEDIATE RELEASE                               Monday, November 23, 2009

Arms Dealer Pleads Guilty to Conspiracy to Supply U.S. Fighter Jet Engines to Iran

The Justice Department announced today that Jacques Monsieur, a Belgian national and resident of France suspected of international arms dealing for decades, pleaded guilty today in U.S. District Court for the Southern District of Alabama to conspiracy to illegally export F-5 fighter jet engines and parts from the Untied States to Iran.

Monsieur along with Dara Fotouhi, aka Dara Fatouhi, an Iranian national currently living in France, was charged in a six-count indictment returned on Aug. 27, 2009, with conspiracy, money laundering, smuggling, as well as violations of the Arms Export Control Act (AECA) and the International Emergency Economic Powers Act (IEEPA). Monsieur was arrested by federal agents in August 2009 upon his arrival in New York. Fotouhi remains at large.

According to Monsieur’s factual proffer and the documents filed in court, Monsieur, along with his co-conspirator Fotouhi, are experienced arms dealers who have been actively working with the Iranian government to procure military items for the Iranian government. In February 2009, Monsieur contacted an undercover agent seeking engines for the F-5 (EIF) fighter jet and the C-130 military transport aircraft for export to Iran. Thereafter, Monsieur began having regular e-mail contact with the undercover agent regarding the requested F-5 engines and parts.

These engines, known as J85-21 models, are replacement engines for the F-5 fighter jet that was sold to Iran by the United States before the 1979 Iranian revolution. The engines and parts are designated as defense articles on the U.S. Munitions List and may not be exported from the United States without a license from the U.S. State Department. Additionally, these items may not be exported to Iran without a license from the U.S. Treasury Department due to the U.S. trade embargo on Iran.

In May 2009, an undercover agent met with Monsieur where Monsieur introduced Fotouhi as a business associate, and again discussed the illegal export of F-5 fighter jet engines from the United States to Iran. During this negotiation, Monsieur asked the undercover agent if he could obtain or use U.S. shipping or export authorization documents that falsely indicated that the end user of the items would be located in Colombia.

In June 2009, Monsieur sent an e-mail to the undercover agent and provided a purchase order for F-5 fighter jet parts from a front company for an organization known as Trast Aero Space, located in Kyrgyzstan. The order requested that the parts be located by the undercover agent and illegally exported to the United Arab Emirates for the transshipment to Iran. The following month, Monsieur contacted the undercover agent indicating that approximately $110,000 had been wired from Dubai to a bank account in Alabama as payment for the parts. He also indicated that a deposit of $300,000 would be forthcoming as a down payment for two F-5 fighter jet engines. In August 2009, Monsieur requested information from the undercover agent about his contact in Colombia for forwarding the aircraft parts from Colombia to the United Arab Emirates.

"Today’s plea underscores the threat posed by Iranian procurement networks and the international arms traffickers who help supply them," said David Kris, Assistant Attorney General for National Security. "I applaud the many agents from the U.S. Immigration and Customs Enforcement and the Defense Criminal Investigative Service who worked tirelessly to bring about this important case."

Eugene A. Seidel, Acting U.S. Attorney for the Southern District of Alabama said, "Today’s prosecution clearly shows that the United States will continue to be vigilant in cases dealing with arms traffickers and will relentlessly pursue every lead to shut down illegal arms transfer to Iran."

"We realize foreign governments actively seek our equipment for their own military development. Therefore, preventing the export of critical technologies and restricted munitions is of extreme concern to the Department of Defense because of the real possibility that our soldiers, sailors, airmen and Marines may have to face this material in the hands of our adversaries and thereby lose the advantage that U.S. technology is supposed to provide them," said Sharon E. Woods, Director, Defense Criminal Investigative Service. "Protecting American’s Warfighters through technology protection is a top priority for the Defense Criminal Investigative Service, the law enforcement arm of the DoD Inspector General, and a fundamental focus for our special agents."

"The guilty plea of Monsieur reflects the government’s commitment to ensuring that critical technologies and military-grade weapons not fall into the wrong hands," said U.S. Immigration and Customs Enforcement (ICE) Assistant Secretary John Morton. "ICE will continue bringing to bear its unique law enforcement authorities to investigate and enforce criminal violations of all U.S. export laws related to military items and controlled "dual-use" commodities."

Monsieur faces a maximum penalty of five years in prison and a $250,000.00 fine.

This case was investigated by the Department of Homeland Security’s U.S. Immigration and Customs Enforcement (ICE) and the Department of Defense’s Defense Criminal Investigative Service (DCIS). The prosecution is being handled by Assistant U.S. Attorney Gregory A. Bordenkircher of the U.S. Attorney’s Office for the Southern District of Alabama, with assistance from the Counterespionage Section of the Justice Department’s National Security Division.

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Transparency International Releases 2009 Corruption Perceptions Index; Calls Overall Results a "Great Concern"

Transparency International today released its annual 2009 Corruption Perceptions Index (CPI) that measures the perceived levels of public-sector corruption in countries. The 2009 CPI scores 180 countries on a scale from zero (highly corrupt) to ten (highly clean) using 13 sources from 10 independent
institutions. All sources measure the overall extent of corruption (frequency and/or size of bribes) in the public and political sectors of numerous countries.

Transparency International's CPI is a very useful tool for determining the extent and risk of corruption in countries where companies conduct business.

Highest scorers in the 2009 CPI are New Zealand at 9.4, Denmark at 9.3, Singapore and Sweden tied at 9.2 and Switzerland at 9.0. These scores reflect political stability, long-established conflict of interest regulations and solid, functioning public institutions.

Japan and the United Kingdom are both ranked 17th (7.7) and the United States is ranked 19th (7.5)

Not surprisingly, fragile, unstable countries that have been scarred by war and ongoing conflict linger at the bottom of the index. These countries include: Somalia, ranked 180th with a score of 1.1, Afghanistan at 1.3, Myanmar at 1.4 and Sudan tied with Iraq at 1.5. Nigeria is ranked 130th with a score of 2.5.

The vast majority of the 180 countries included in the 2009 CPI scored below five.

Countries experiencing significant declines in their CPI score from 2008 to 2009 were Bahrain, Greece, Iran, Malaysia, Malta and Slovakia.

Countries that improved their CPI scores from 2008 to 2009 were Bangladesh, Belarus, Guatemala, Lithuania, Moldova, Montenegro, Poland, Syria and Tonga.

According to Transparency International:

Overall results in the 2009 index are of great concern because corruption continues to lurk where opacity rules, where institutions still need strengthening and where governments have not implemented anti-corruption legal frameworks.

Even industrialized countries cannot be complacent: the supply of bribery and the facilitation of corruption often involve businesses based in their countries. Financial secrecy jurisdictions, linked to many countries that top the CPI, severely undermine efforts to tackle corruption and recover stolen assets.

A table showing the complete list of scores of each country included in the 2009 CPI can be found here.

An interactive map showing the scores of each country included in the 2009 CPI can be found here.

Transparency International is a non-partisan network of more than 90 locally established national chapters aimed at fighting corruption by bringing together relevant players from government, civil society, business and the media to promote transparency in elections, in public administration, in procurement and in business.

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Census Bureau Now Providing Exporters With AES Data Associated With Routed Export Transactions

The Census Bureau's Foreign Trade Division (FTD) recently started providing U.S. Principal Parties in Interest (USPPIs) and other filers requesting their Electronic Export Information filed in the Automated Export System (AES) with the 10 data elements required in routed export transactions.

Data associated with routed export transactions was not previously provided to USPPIs but was added by Census due to numerous requests from exporters.

A routed export transaction transaction is where a Foreign Principal Party in Interest (FPPI) authorizes a U.S. agent to facilitate the export of items from the U.S. on its behalf and prepare and file the Electronic Export Information (EEI) via AES. Section 30.3(e)(1) of the Foreign Trade Regulations (15 CFR § 30.3(e)(1)) requires the USPPI to provide the forwarding or other authorized agent with the following 10 data elements for purposes of preparing the AES filing:

(i) Name and address of the USPPI
(ii) USPPI’s EIN
(iii) State of origin
(iv) FTZ if applicable
(v) Commercial description of commodities
(vi) Origin of goods indicator: Domestic (D) or Foreign (F)
(vii) Schedule B or HTSUS Classification Commodity Code
(viii) Quantities/units of measure
(ix) Value
(x) Export Control Classification Number (ECCN)

The FTD's Regulations, Outreach and Education Branch will provide USPPIs with validated records of their AES submissions upon written request. This data is useful for companies conducting internal audits of their AES compliance. Census will provide companies with 12 months of AES data free of charge every 365 days.

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Registration Now Open for Webcast of CBP's Sold-Out 2009 Trade Symposium

U.S. Customs and Border Protection (CBP) announced today that it is offering for the first time a webcast of the sold-out 2009 Trade Symposium that will be held in Washington, DC from December 8 – 10, 2009.

All general sessions of the Trade Symposium will be shown as part of the live webcast and CBP will also select three breakout sessions to show during the live webcast. All of the general sessions and eight breakout sessions will be available to registrants to view for 30 days following the program. on-demand access.

The cost to view the webcast is $35.00 and is now open. Click here for the 2009 Trade Symposium agenda and to register for the webcast (note that the link to the registration website is listed in the "on the web" portion on the right side of the page).

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U.N. Agencies Launch 2009 Anti-Corruption Campaign

The United Nations Development Program (UNDP) and the United Nations Office on Drugs and Crime (UNODC) today launched a joint 2009 campaign to raise awareness on how corruption adversely impacts development.

The launch of this anti-corruption campaign was timed to coincide with the third session of the Conference of State Parties to the U.N. Convention against Corruption in Doha, Qatar from November 9-13. The Convention against Corruption has been ratified by over two-thirds of the 192 State Members of the U.N. since its entered force in 2005.

Through a series of posters, brochures and other material, the new campaign highlights how corruption obstructs access to education, health and justice, limiting their opportunity to prosper and undermining democracy.

The 2009 campaign is a follow-up to the UN's widely praised "Your No Counts" campaign.

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Senate Committee Holds Hearing on Nomination of Undersecretary of Commerce for Export Administration

The Senate Committee on Banking, Housing, and Urban Affairs held a hearing today on the nomination of Eric Hirschhorn to serve as Under Secretary of Commerce for Export Administration, the most senior position in the Bureau of Industry and Security.

Mr. Hirschhorn, who is expected to play a central role in current export control reform efforts, was nominated by President Obama on September 11, 2009.

The hearing, chaired by Senate Banking Committee Chairman Christopher Dodd (D-CT), and included nominees for two other agencies, lasted only an hour and began with prepared statements by Senators Dodd and Ranking Member Richard Shelby (R-AL).

Mr. Hirschhorn was introduced by Representative Stephen Solarz (D-NY). Mr. Hirschhorn worked for Mr. Solarz in the New York Legislature many years ago. Mr. Hirschhorn's prepared remarks, which can be found here, focused on his previous experience work on export control issues at the Department of Commerce in the early 1980s and his many years in private law practice.

Following the prepared remarks, Senators Dodd and Shelby asked several questions. Senator Dodd asked about export control reforms, foreign availability, Iran sanctions and transshipment issues. Senator Shelby asked Mr. Hirschhorn about his past work on behalf of clients opposed to unilateral sanctions as well as export control reform issues.

Mr. Hirschhorn should be easily confirmed by the full Senate in the coming weeks.

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Director of Singapore Firm Sentenced for Illegally Exporting Controlled Aircraft Components to Iran

A U.S. citizen who served as a director of a Singapore-based importer and exporter of aircraft parts was sentenced today in federal court in Brooklyn to 46 months in prison for conspiring to export aircraft parts to Iran. The defendant was also ordered to forfeit $500,000 to the U.S. Treasury Department.

Laura Wang-Woodford, who served as a director of Singapore-based Monarch Aviation Pte., Ltd. and Jungda International Pte. Ltd., was arrested in December 2007, at San Francisco International Airport, pleaded guilty earlier this year to conspiring to export aircraft parts to Iran via Singapore and Malaysia. Wang-Woodford's co-conspirator, her husband Brian Woodford, remains a fugitive.

Ms. Wang-Woodford and her husband, who were originally indicted in 2003, were subsequently charged with:

• 1 count of conspiring to export aircraft parts to Iran;
  
• 15 counts of exporting aircraft parts to Iran in violation of the International Emergency Economic Powers Act;
  
• 1 count of conspiring to export defense articles without a license;
• 2 counts of exporting and attempting to export defense articles without a license, in violation of the Arms Export Control Act and the International Traffic in Arms Regulations; and
  
• 1 count of conspiring to launder the proceeds of the unlawful export of defense articles.

The Justice Department's press release in case can be found here.

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Sentencing of Atmospheric Glow Technologies, Inc. Now Set for November 23rd

The often delayed sentencing of Atmospheric Glow Technologies, Inc. (AGT), the company alleged to be Professor John Reece Roth's co-conspirator in the criminal case involving unlawful exports of ITAR controlled technology, has now been set for November 23, 2009 before U.S. District Judge Varlan in Knoxville, Tennessee.

As has been widely reported, AGT plead guilty in August 2008 to 10 counts of unlawfully exporting defense articles to a citizen of the People’s Republic of China in violation of the Arms Export Control Act.

AGT, which filed for bankruptcy in 2008, was a privately held plasma technology company formed in 2000 as a spin-off of the University of Tennessee's Plasma Sciences Laboratory. Professor Roth, who was an original shareholder of AGT, was hired by AGT to work on the U.S. Air Force plasma technology contract that led to the violations of U.S. export control laws that resulted in criminal proceedings against AGT, Roth and Daniel Max Sherman, a physicist who formerly worked at AGT and was trained by Roth. In July of this year Roth was sentenced to serve 48 months in prison and Sherman received a prison sentence of 14 months in August.

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Congratulation to Winners of 2009 Presidential "E" and "E Star" Awards for Export Excellence

Congratulations to the 21 companies and organizations that received the prestigious 2009 Presidential “E” and “E Star” Awards for export excellence today during a ceremony at the National District Export Council Conference at the Department of Commerce. Secretary of Commerce Locke presented the awards to the recipients.

The “E” Award, which was created by President John F. Kennedy in 1961, is the highest U.S. government recognition any U.S. entity may receive for supporting export activity.

The Presidential “E Star” Award, which was authorized by the Secretary of Commerce in 1969, recognizes continued superior performance in increasing or promoting exports. Only previous recipients of the "E" Award are eligible.

The 2009 “E” Award recipients are:

• Automation International Ltd., Houston, Texas;
• Capstone Turbine Corporation, Chatsworth, Calif.;
• Falcon Waterfree Technologies, Los Angeles, Calif.;
• J.R. Potter & Associates, Inc., Cleveland, Ohio;
• Kanawha Scales & Systems, Inc., Poca, W.Va.;
• Lexington International, LLC, (HairMax), Ft. Lauderdale, Fla.;
• MacNeil Automotive Products, Ltd., Downers Grove, Ill.;
• Medtronic Inc., Minneapolis, Minn.;
• Otis McAllister, San Francisco, Calif.;
• Rust-Oleum Corporation, Vernon Hills, Ill.;
• Sioux Corporation, Beresford, S.D.;
• Southwest Windpower, Flagstaff, Ariz.;
• The Produce Connection, Miami, Fla.;
• Turbine Air Systems, Houston, Texas;
• California Chamber of Commerce, Sacramento, Calif.;
• Illinois SBDC and NAFTA Opportunity Centers, Peoria, Ill.;
• West Virginia Development Office, International Division, Charleston, W.Va.

The following companies are the 2009 “E Star” Award winners:

• Dometic Environmental Corp., Pompano Beach, Fla.;
• Valmont Industries, Inc., Omaha, Neb.;
• BDP International, Philadelphia, Pa.;
• Enterprise Florida, Orlando, Fla.

Further information on the "E" and "E Star" Awards, including the application process, can be found here.

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Next NCITD Meeting to Feature Speakers from OFAC, CBP and Census

The next meeting of the National Council on International Trade Development (NCITD) will take place on Tuesday, November 10, 2009 in Washington, DC and will feature the following speakers:

• David J. Brummond, Senior Sanctions Adviser – Insurance, Office of Foreign Assets Control, Department of the Treasury. Topic: Insurance Elements in Trade Transactions

• Gail Hamill, Office of Rules and Regulations, Customs and Border Protection, Department of Homeland Security. Topic: The Classification Process and Related Recent Developments
• Dale C. Kelly, Assistant Division Chief, Data Collection, Foreign Trade Division, U.S. Census Bureau. Topic: Trade Regulations Update

• Best Practices Roundtable: Facilitating Payments Under the Foreign Corrupt Practices Act (FCPA). Moderators: Doug Jacobson and Margaret Gatti

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

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Next NCITD Meeting to Feature Speakers from Center for International Trade and Security and State Department

The next meeting of the National Council on International Trade Development (NCITD) will take place on Wednesday, October 14, 2009 in Washington, DC and will feature the following speakers:

• Ryan Cathie, Jay P. Nash and Clarence Smith, Center for International Trade and Security, University of Georgia. Topic: Export Controls in China, Japan an Singapore

• Justin Friedman, Director, Office of Export Control Cooperation, U.S. Department of State. Topic: International Export Control Assistance

• Best Practices Roundtable: Expanding a U.S. Compliance Program as a Global Program, Moderators: Carol Fuchs and Felice Laird
  

For information on how to join NCITD or to attend the meeting, see www.ncitd.org or contact the NCITD Secretariat at 202-872-9280.

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DDTC Issues Two Important Notices on its Website

The Directorate of Defense Trade Controls (DDTC) has issued the following two notices on its website that should be reviewed by manufacturers and exporters of defense articles and services:

• Updated version of Licensing of Foreign Persons Employed by a U.S. Person (note that the new text added by DDTC in this notice is highlighted in yellow) (Click here to read).


• DSP Amendments for Value or Quantity Changes (this is an important notice since it states that effective immediately, DDTC will no longer process DSP amendments for value or quantity changes and a replacement license must be obtained) (Click here to read).

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Secretary Locke Proposes Reforms to Export Controls System During Speech at BIS Update Conference

In a speech today during the the Bureau of Industry and Security’s Update Conference on Export Controls, Commerce Secretary Locke announced that he has proposed that the Commerce Department, working with other government agencies, immediately explore pursuing two reforms that will "provide substantial relief" to U.S. exporters while strengthening U.S. national security and foreign policy interests:

• Eliminating dual-use export license requirements for allies and partner nations;
• Implementing a fast-track procedure for the review of dual-use export licenses for other key allies.

While the first of these proposed changes will require amendments to the Export Administration Regulations, the second proposed change may be able to be implemented fairly quickly. Stay tuned.

The full text of Secretary Locke's speech can be found here.

Click here to view the live Twitter feed from some of today's Update sessions.

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News from BIS Update Conference Posted on Twitter

Just posted some news from the export enforcement panel at BIS Update on our Twitter feed at twitter.com/tradelawnews.

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OFAC to Hold Financial Sector Symposium in New York City

The Treasury Department's Office of Foreign Assets Control (OFAC) announced today that it will be holding its first-ever Financial Sector Symposium in New York City on Tuesday, December 1, 2009.

According to OFAC, the Financial Sector Symposium is designed to provide the financial sector with insight and perspective from top OFAC officials on banking, securities and OFAC's enforcement guidelines and will feature speakers from OFAC and state and federal regulators.

For more information and to register for OFAC's Financial Sector Symposium, see the following link (PDF file).

OFAC held a very successful International Trade Symposium in Washington, DC earlier this year.

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