ITAR Freight Forwarder Update: Panalpina Removed from EPLS

As a follow-up to our February 26, 2012 post on the proposed debarment of a number of freight forwarders and the impact on ITAR-related transactions, Panalpina Inc. and its parent company Panalpina World Transport (Holding) AG were recently removed from the Excluded Party List System (EPLS).

This action took place after Panalpina presented to the Department of the Air Force information to demonstrate that the companies' present responsibility to conduct business as a federal contractor. On March 16,  after consideration of that information, including an oral presentation, the Air Force notified both companies that the Air Force has determined that suspension or debarment of the companies was no longer necessary.  The proposed debarments have been terminated and both entities have since been removed from the Excluded Parties List.

Because the Panalpina entities are no longer considered to be "ineligible" parties under section 120.1(c) of the ITAR, there should be no further need for exporters to submit a "transaction exception" request to DDTC for pending or future ITAR authorizations involving the following freight forwarders:

• CEVA Logistics LLC   (removed from EPLS on February 24, 2012)
• EGL Inc. (now owned by CEVA Logistics) (removed from EPLS on February 24, 2012)
• Kuehne and Nagel International AG (removed from EPLS in March 2012)
  
• Panalpina Welttransport (Holding) AG (removed from EPLS on March 16, 2012)
• Panalpina Inc. (removed from EPLS on March 16, 2012)

 The remaining list of ITAR-ineligible freight forwarders is as follows:

• Schenker AG
• BAX Global Inc. (now part of DB Schenker)

DDTC's February 27, 2012 Web Notice has not yet been updated to reflect this change and hopefully they will issue an updated notice on their website soon. While DDTC does not normally issue notices on whether parties included on the EPLS are "ineligible" to participate in ITAR transactions DDTC issued detailed guidance in this case due to the major impact on defense trade and the large number of questions that DDTC received on this issue.

The recent addition of the freight forwarders to the EPLS serves as an important reminder that exporters and other parties involved in ITAR-related transactions should screen their transactions against the EPLS. Companies that use third party screening software should therefore ask their screening providers whether the EPLS is one of the lists used in the screening process and should perform tests to see whether these forwarders are included as a "hit". While inclusion of a party on the EPLS does not mean the party will be prohibited from all export transactions, particularly those "subject to the jurisdiction of the EAR", an EPLS "hit" is a "red flag" that should be resolved prior to the export from taking place.