Orbitz Launches Campaign to End U.S. Travel Ban to Cuba

Online travel provider Orbitz recently launched the OpenCuba.org website to give travelers the opportunity to get directly involved in a grassroots effort to convince the Obama Administration and Congress to end the ban on travel to Cuba for those Americans who do not have immediate family members located on the island.

The site allows travelers to sign a petition calling for an end to the travel ban. Orbitz executives will formally present the petition to U.S. officials in Washington, DC later this year.

As an incentive to sign the online petition, every person who signs the petition will receive a $100 coupon redeemable on Orbitz against a vacation to Cuba valid if and when the U.S. Government removes the ban on travel to Cuba, and as soon as Orbitz is able to offer such travel on its website.

The Fort Myers News-Press today published a useful chronology of Cuba travel restrictions here.

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Despite Embargo, Cuba Imports Daiquiri Mix from USA

The AP published a story this evening entitled "Despite embargo, Cuba imports daiquiris from US" describing the types of products sold from the U.S. pursuant to the "agricultural waiver" of the U.S. embargo on Cuba. The story's lede states: "Jugs of daiquiri mix. Gourmet nuts. Rolls of newsprint. Not exactly humanitarian aid, but still among the items sold to Cuba under an agricultural waiver carved out of the decades-old U.S. trade embargo."



While the article notes that large quantities of grain, chicken and other food products are sold by U.S. companies to Cuba, the article also states that the "the waiver is so broad that it includes beer, soda and a host of inedible items such as beauty products, artwork, utility poles, kitchen cabinets and Alabama newsprint."



This article is not entirely correct when it implies that so-called "luxury" food or some of the inedible items are not eligible to be sold to Cuba under U.S. law. The article also contains some other inaccurate information regarding the types of products eligible for the so-called "agricultural waiver." In addition, as discussed below, any bartender would know that the article's headline is missing a key word.



First a little history. The so-called "agricultural waiver" of the Cuba embargo is not unique to the U.S. sanctions on Cuba and dates back to a January 5, 1999 announcement by President Clinton that the U.S. would initiate certain actions to enhance support of the Cuban people to promote transition to democracy. Under President Clinton's initiative, the Department of Commerce's Bureau of Export Administration (as it was then known) was authorized to approve, on a case-by-case basis, applications for exports of food and certain agricultural commodities for sale to independent non-governmental entities in Cuba.



President Clinton subsequently announced in April 1999 that the U.S. would lift sanctions on commercial sales of most agricultural commodities and food products to Iran, Libya and Sudan since such products should not be used as a foreign policy tool and that medical and agricultural products would not be included in future sanctions programs imposed by President.



During the next two years, there were efforts underway in Congress to codify the Clinton Administration's policy and to extend the policy to Cuba. For example, in June 1999, Representative George Nethercutt (R-WA) offered an amendment to the FY 2000 agriculture appropriations bill to “prohibit unilateral economic sanctions against a foreign government, lift current sanctions as they relate to agriculture and medical supplies, and provide for a national security waiver.” In August 1999, the ‘‘Food and Medicine for the World Act” was introduced in Senate as an amendment to the FY2000 agriculture appropriations bill. In March 2000, the Senate Foreign Relations Committee held a mark up of S. 1771, the ‘‘Food and Medicine for the World Act.’’ During the mark up, the name was changed to ‘‘Trade Sanctions Reform and Export Enhancement Act.’’



In October 28, 2008, the Trade Sanctions Reform and Export Enhancement Act language was included in the FY 2001 appropriations bill for Agriculture, Rural Development, Food and Drug Administration, and Related Programs (Title IX of H.R. 5426) and ultimately became known as the Trade Sanctions Reform and Export Enhancement Act of 2000, commonly known as TSRA (Pub. Law 106-387). TSRA codified the lifting of U.S. sanctions on commercial sales of food, agricultural commodities, medicines and medical devices to Iran, Libya, North Korea and Sudan, and extended this policy to Cuba (sales of medicines and medical devices to Cuba were previously authorized by the Cuban Democracy Act of 1992). TSRA did not permit such exports to go unregulated, however, and required that such exports be made to licenses or license exceptions.



TSRA defined “agricultural commodities” using the meaning given to that term in section 102 of the Agricultural Trade Act of 1978 (7 U.S.C. 5602). This definition includes a wide range of food commodities, feed, fish, shellfish and fish products, beer, wine and spirits, soft drinks, livestock, fiber, including cotton, wool, and other fibers, tobacco and tobacco products, wood and wood products (including lumber and utility poles), seeds, and reproductive materials such as fertilized eggs, embryos, and semen. It also includes certain fertilizers and organic fertilizers that are not otherwise controlled. A complete list of eligible items can be found in a list (pdf) published and maintained by the Department of Agriculture.



On July 12, 2001, BIS and OFAC published regulations implementing TSRA. The implementing regulations expanded the definition of "agricultural commodities" to include vitamins and minerals, food additives or supplements, and bottled drinking water. The regulations also clarified that the term "agricultural commodities" does not include furniture made from wood, clothing manufactured from plant or animal materials, agricultural equipment pesticides, insecticides, herbicides or cosmetics.



BIS implemented TSRA for exports and reexports of agricultural commodities to Cuba by creating License Exception Agricultural Commodities (AGR) to permit exports and reexports to Cuba. Under License Exception AGR, exporters must submit a notification to the Commerce Department regarding the proposed export. That notification is referred for vetting and review to the Departments of State and Defense. If the three agencies approve the notification, the exporter receives an authorization to ship the products to Cuba using license exception AGR.



According to the U.S. Department of Agriculture, the U.S. now supplies about 30 percent of Cuba’s food and agricultural import requirements.



Now, back to the article. First, the so-called "waiver" of the Cuban sanctions is not a true waiver. Rather, it is an exemption from U.S. sanctions that still requires advance notification and review by the U.S. Government to ensure that the products qualify under TSRA. Second, a similar exemption to the sanctions programs on Iran and Sudan (and previously Libya) has been in place since 1999 and has been codified since 2000. Third, the definition of the term "agricultural commodities" that Congress included in TSRA is broad and legally permits the commercial sales of daiquiri mix, nuts, newsprint, beer, utility poles and similar articles.



However, some of the items mentioned in the article may not be legally sold to Cuba. For example, cosmetics and other beauty products are not eligible to be sold to Cuba under TSRA, unless they are derived from plant material. Similarly, kitchen cabinets, even if made from wood, are ineligible to be exported to Cuba.



In addition, artwork is excluded from the scope of the U.S. embargo on Cuba and other sanctioned countries by the 1994 "Berman Amendment", which restrict the President's authority to regulate the importation or exportation of information or informational materials.



Finally, the article's headline of the article is not entirely accurate since an important word is omitted. The headline should read "Despite embargo, Cuba imports daiquiri mix from US", since the company mentioned in the article only exports the fruit mix for the drink and not the rum, the essential ingredient in a daiquiri.

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All ITAR License Submissions Must be Made Using DTrade 2 Starting May 16, 2009

U.S. exporters and importers of defense articles subject to the jurisdiction of the International Traffic in Arms Regulations (ITAR) are reminded that starting on May 16, 2009, all new license submissions must be made using the DTrade 2 system. The Directorate of Defense Trade Controls (DDTC) has stated that it has "identified and addressed" the issues encountered in the unintended live “beta test” that began last month.

While DTrade 1 will be used to process any cases submitted via that system, all new license submissions to the DTrade1 system will be Returned Without Action.

DDTC has issued a document containing information and tips on using the DTrade2 system to "ensure optimal performance and a better end-user experience."

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No Sentence Yet for Convicted Professor Convicted of Export Control Violations

The Knoxville News Sentinel reports that no decision was made today during the sentencing hearing of University of Tennessee professor Emeritus J. Reece Roth who was convicted in September of various export control violations.

The article states that U.S. District Judge Tom Varlan spent the afternoon hearing testimony from the prosecutors and defense about the nature of the controlled technical data that was provided to foreign nationals. The article notes that Judge Varlan "said he'll decide on a sentence after considering the evidence and letting Roth speak for himself if he wants to." The date of the next sentencing hearing is likely to be set tomorrow.

Today's sentencing of Atmospheric Glow Technologies Inc., who was alleged to be Dr. Roth's coconspirator and which plead guilty to violating U.S. export control laws, has been rescheduled to a future date.

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10 Reasons Trade Compliance Programs Are Unnecessary

Today's guest post is by Rick Miller, director of trade compliance recruitment at Tyler Search Consultants. Rick is a licensed customs broker and served as director of trade compliance for several large companies before joining Tyler Search. Rick can be reached at rmiller@tylersearch.com.

10 Reasons Trade Compliance Programs Are Unnecessary

Companies of all sizes in all industries struggle with trade compliance programs and the trade compliance role. There are many reasons why a compliance program is controversial. Here are the top 10 reasons why a trade compliance program is truly an unnecessary waste of resources:

1. Trade compliance is a cost center with no financial benefit to the company.
Except for avoiding audits, penalties and border delays. Except for avoiding duty under special programs such as the North American Free Trade Agreement, the Central America Free Trade Agreement, the Generalized System of Preferences. Except for tariff engineering, broker management, supplier management.

2. Classification is easy.
Anyone can do it - just pick the lowest duty rate and let Customs tell us if we're wrong. Until Customs catches you and sends you a bill for the duty (plus interest) for all entries made over the last five years. And don't forget the penalty that's sure to follow.

3. Shipments to and from Canada and Mexico are not really imports/exports.
Tell that to U.S. Customs. Canada and Mexico may be our biggest trading partners, but they have their own customs services to deal with. And, oh yeah, those folks at Commerce may require an export license.

4. Any product purchased in the U.S. is U.S.-origin.
The trade deficit must come from somewhere ... make sure you ask before you assume. Get it in writing and then ask again.

5. Any U.S.-origin product is NAFTA-eligible.
Unless you are audited, of course. The NAFTA rules of origin are complex and vary tremendously depending on the item. The value of U.S. components may or may not have anything to do with eligibility - even with 99 percent U.S. components. When importing under NAFTA, every compliance professional needs to verify the supplier's certificate of origin. Ask and ask again.

6. We have been doing business for years without worrying about Customs.
Ever notice that all the big penalty cases in the news are for companies that have been around for a while?

7. Our customs brokers and freight forwarders are responsible for compliance.
Importers of record for imports and U.S. principal parties of interest for exports are on the hook not the broker or forwarder - period! Ever look at the liability limitations on your broker and/or forwarder agreements?

8. We need to make exceptions for big customers or we'll lose the business.
So if I walk past the bank every day on my way to work and only rob it once, the judge will let me off the hook because I was good most of the time? Where is my duffle bag?

9. C-TPAT is not mandatory, so we aren't spending any money or dedicating any resources to it.
Sure it is not mandatory, but don't come crying to trade compliance when the borders tighten up and your non-C-TPAT shipments are delayed while all C-TPAT importers are given a priority.

10. Compliance slows deliveries.
Noncompliant importers will face many more inspections and delays, especially after Customs finds the first problem. Due to limited resources, Customs targets the bad guys. Even compliant importers face delays, but if Customs already knows your company has a trade compliance program, they are more likely to work with you.

While failure to maintain a viable trade compliance program may sound funny, border delays, inspections, audits and penalties are not. Trade compliance and supply chain security is more then a fact of business life today. Our world has changed. It's here to stay. Work closely with your trade compliance team. Top down support is the critical component for a successful trade compliance program.

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Port of Chicago Updates Procedures for Imports and Exports of Defense Articles

U.S. Customs and Border Protection at the Port of Chicago today issued an updated Pipeline (09-12) containing detailed and information on the port's procedures for processing imports and exports of defense articles subject to the jurisdiction of the International Traffic in Arms Regulations (ITAR), including hand-carried and cargo shipments.

The pipeline contains useful information on lodging permanent licenses, license decrementation, handling license amendments and the proper procedures for the use of various license exemptions set forth in the ITAR.

While exporters and importers should check with their local ports to verify the local procedures applicable to the import and export of ITAR shipments, the Port of Chicago's Pipeline contains a good summary of the relevant requirements.

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Global Antidumping Database Confirms Increased Number of Trade Remedy Cases

According to data compiled by the Global Antidumping Database, the first quarter of 2009 saw an 18.8% year increase in the number of antidumping, countervailing duty, global safeguard, and China-specific safeguards brought by WTO members compared to the same period in 2008. Not surprisingly, China's exporters were the dominant target of these investigations, accounting for more than 2/3 of the new cases.

The Global Antidumping Database is a project of Chad P. Bown, an Associate Professor in the Department of Economics and International Business School at Brandeis University and a Fellow in the Global Economy and Development Program at the Brookings Institution.

An analysis of the data prepared by Professor Bown shows that:

Compared to the same time period in 2008, the first quarter of 2009 also saw a 15.4% increase in the imposition of new import-restricting tariffs and quotas upon completion of earlier investigations initiated under these trade remedy laws, a trend that will almost certainly continue to increase throughout the remainder of 2009 and into 2010. While India imposed the most new import barriers under these laws during this time period, other G-20 members that did so include Argentina, Australia, Brazil, Canada, the EU and its member states, South Korea, Turkey and the United States. China's exporters are the dominant target for these newly imposed import restrictions facing new barriers in over 70% of the cases.

The complete and detailed data on antidumping investigations will be made available in early summer 2009 as version 5.0 of the Global Antidumping Database.

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Tennessee Professor Convicted of Export Control Violations Will be Sentenced This Wednesday

After numerous delays, the sentencing of University of Tennessee professor Emeritus J. Reece Roth for violating U.S. export control laws has been set for 10 a.m. on Wednesday, May 13, 2009 in federal court in Knoxville, Tennessee.

Atmospheric Glow Technologies Inc., who was alleged to be Dr. Roth's coconspirator and which plead guilty to violating U.S. export control laws, will be sentenced immediately before Dr. Roth.

By way of background, on September 3, 2008, professor Roth was convicted by a federal jury of one count of conspiring with Atmospheric Glow Technology to violate the Arms Export Control Act (AECA) and 15 counts of violating the AECA for exporting controlled technical data associated with an Air Force Research Laboratory contract to a Chinese national. Dr. Roth was also convicted of one count of wire fraud relating to defrauding the University of Tennessee of honest services by illegally exporting controlled technology associated with the Air Force contract.

Atmospheric Glow Technologies, a privately held plasma technology company located in Knoxville, Tennessee, plead guilty in August 2008 to 10 counts of a federal indictment charging the company with unlawfully exporting controlled technology to a Chinese citizen.

Dr. Roth faces a maximum penalty of five years in prison and a $250,000 fine for the conspiracy and fraud convictions. The 15 convictions for violating the AECA each carry a maximum penalty of 10 years in prison and a $1 million fine.

Atmospheric Glow Technologies faces a maximum criminal fine of $1,000,000 and a maximum term of five years of probation for each of the 10 counts.

This case has generated a great deal of interest and concern in the academic and research communities.

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Census Bureau's Foreign Trade Division Names New Trade Ombudsman

The U.S. Census Bureau's Foreign Trade Division has announced that Mr. Omari Wooden has been named as the Foreign Trade Division's Trade Ombudsman. Mr. Wooden replaces Jerry Greenwell, who retired in January 2009 after more than 36 years with Census.

Mr. Wooden joined the U.S. Census Bureau's Foreign Trade Division in October 1997. He had been the project manager for postdeparture reporting program in the Automated Export System (AES) Branch.

Mr. Wooden has been recognized numerous times for his outstanding work with the export trade community, including special recognition for his effort with AES Team for marketing and customer service. Most recently, Mr. Wooden received a team Silver Medal Award for Leadership from the Department of Commerce for his work on the revision and implementation of the new Foreign Trade Regulations.

Mr. Wooden received his BS degree in Mathematics from the University of Maryland at College Park. He also received a Master of Science in Management from the University of Maryland and a Master's Certificate in Project Management from the George Washington University School of Business.

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Iran Refined Petroleum Sanctions Act of 2009 Introduced in U.S. Congress

Representative Howard Berman (D-CA), Chairman of the House Foreign Affairs Committee, yesterday introduced the Iran Refined Petroleum Sanctions Act of 2009 (H.R. 2192).

If enacted, H.R. 2192 would require that any foreign entity that exports refined petroleum to Iran, or otherwise enhances Iran’s ability to import refined petroleum (such as financing, brokering, underwriting or providing ships for such activity), will be subject to a number of financial and other sanctions that would effectively bar the foreign entity from doing business in the United States.

The bill also would impose sanctions on any entity that provides goods or services that enhance Iran’s ability to maintain or expand its domestic production of refined petroleum, including any assistance in refinery constructions, modernization or repair.

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U.S. Customs and Border Protection to Establish Customs Broker Self-Assessment Pilot Program

U.S. Customs and Border Protection (CBP) recently announced in the Federal Register the creation of a new Broker Self-Assessment (BSA) pilot program.

The BSA pilot program, which in many ways will be similar to the Importer Self Assessment (ISA) program, is intended to allow customs brokers to determine how well they comply with customs requirements, provide recognition and support to participating brokers and facilitate legitimate trade so that CBP can focus on higher-risk enforcement issues.

To participate in the BSA pilot program a customs broker must:

• have been licensed for at least five years;
• be a member of the Customs-Trade Partnership Against Terrorism (C-TPAT) program;
• operate through the Automated Broker Interface and the Automated Commercial Environment;
• possess a broker national permit;
• maintain records demonstrating the accuracy of CBP transactions;
• maintain and update internal controls and test them periodically based on risk;
• regularly adjust and improve its internal control system;
• voluntarily disclose to CBP any deficiencies;
• maintain an audit trail linking financial records to entries filed with CBP; and
• have documented policies and procedural manuals relating to CBP business.

Applications to participate in the pilot program must be submitted to CBP by May 27, 2009. CBP will select a limited number of participants that are representative of key sectors of the brokerage community or whose structure and processes present potential challenges.

CBP has not yet indicated the types of benefits that customs brokers will receive for participating in this program.

CBP intends to review the BSA pilot program within one year after its effective date to measure its effects and achievements and recommend whether the BSA program will become permanent.

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