Free Antiboycott, Export Controls, Sanctions and FCPA Compliance Training Programs Now Available From Lawline

Lawline, a leading provider of continuing legal education (CLE) programs, has opened up their entire library of online training courses so that anyone can view the courses for free. 

Included in Lawline's course catalog are four one-hour international trade compliance programs presented by international trade attorney Doug Jacobson on the following topics:

• An Introduction to U.S. Antiboycott Laws and Compliance 

• An Introduction to U.S. Export Controls and Sanctions 

• International Traffic in Arms Regulations (ITAR): What You Need to Know 

• The U.S. Foreign Corrupt Practices Act: Compliance and Enforcement

These four programs, which are highly rated by those that have seen them, can be accessed here. The entire Lawline catalog of courses can be accessed here. 

Only attorneys wanting to obtain CLE credit will have to pay a fee to Lawline. CLE credit is available to attorneys that are members of the bars of numerous states, including Texas, California and New York. 

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AAEI to Present Export Control Reform Webinar With BIS Undersecretary Hirschhorn on October 11, 2012

The American Association of Exporters and Importers (AAEI) will be hosting a webinar on the pending Export Control Reform effort on October 11, 2012 at 2 pm Eastern time. 

The speakers will include  Under Secretary for Industry and Security Eric L. Hirschhorn and Director of the Bureau of Industry and Security's Office of Exporter Services, Bernie Kritzer. 

The webinar, which is open to the public, will provide details and other important information on the current status of the export control reform initiatvie. Questions will also be taken from participants.  

The webinar fee is $25 for AAEI members and $35 for non-AAEI members. The webinar registration link can be found here. 

More information on the President's Export Control Reform can be found at Export.gov/ecr.

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Final Rule Adding 164 Parties to BIS Entity List Will Take Effect on October 9, 2012

The final rule mentioned in our previous post adding 164 parties to the Bureau of Industry and Security's Entity List will be published in the Federal Register on Tuesday, October 9, 2012 and will become effective on that date. The Federal Register notice is available below. 


The parties being added to Entity List are the 164 foreign persons and companies who were identified during a U.S. Government investigation as assisting a network of companies and individuals (namely Arc Electronics in Houston) involved in the procurement and delivery of electronic products subject to the Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR) to Russia in violation of the EAR and ITAR (a list of the part numbers of the products allegedly shipped to Russia can be found on pages 20-23 of the indictment. It is interesting to note that the indictment only mentions one part number subject to the ITAR).  


The practical impact of the publication of this final rule is that effective October 9, 2012 nothing "subject to the EAR" can be exported, reexported or transferred to any of the named parties starting on October 9, 2012 unless the items were already "en route aboard a carrier to a port of export or reexport." This is because the Entity List imposes a licensing policy of “presumption of denial” on all 164 parties. 

While the U.S. Government's Consolidated Restricted Party List was updated late last week to add all 164 names some commercial restricted party screening providers will not update their lists until this notice is published on Tuesday.

BIS Entity List Additions (10.8.2012)

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U.S. Indicts U.S. and Russian Companies and Individuals Involved in Russian Military Procurement Network and Adds 164 Parties to BIS Entity List

As a result of an investigation involving an alleged Russian military procurement network, the U.S. Department of Justice announced today that it had unsealed an indictment against two companies and 11 individuals located in the U.S. and Russia and executed a number of search warrants at various residences, businesses and banks in the U.S. 

In a coordinated action, the Commerce Department's Bureau of Industry and Security (BIS) also issued a final rule (PDF) amending the Export Administration Regulations (EAR) to add 164 foreign persons and companies to the Entity List who allegedly received, transshipped or facilitated the exports of the items to Russia.

The Indictment

According to the indictment, the defendants were allegedly involved in: 

a surreptitious and systematic conspiracy to obtain advanced, technologically cutting-edge microelectronics from manufacturers and suppliers located within the United States and to export those high-tech goods to Russia, while carefully evading the government licensing system set up to control such exports. The microelectronics shipped to Russia included analog-to-digital converters, static random access memory chips, microcontrollers, and microprocessors” that were subject to the jurisdiction of the Export Administration Regulations (EAR) or International Traffic in Arms Regulations (ITAR).

The Justice Department also stated that the defendants:

allegedly exported many of these high-tech goods, frequently through intermediary procurement firms, to Russian end users, including Russian military and intelligence agencies. To induce manufacturers and suppliers to sell them these high-tech goods, and to evade applicable export controls, the defendants often provided false end user information in connection with the purchase of the goods, concealed the fact that they were exporters, and falsely classified the goods they exported on export records submitted to the Department of Commerce. For example, in order to obtain microelectronics containing controlled, sensitive technologies, Arc claimed to American suppliers that, rather than exporting goods to Russia, it merely manufactured benign products such as traffic lights. Arc also falsely claimed to be a traffic light manufacturer on its website. In fact, Arc manufactured no goods and operated exclusively as an exporter.

In addition to the 11 individuals named in the announcement, the two companies that were indicted are:

• Arc Electronics, Inc., Houston, Texas
• Apex System, L.L.C., Moscow, Russia

Addition of 164 Parties to BIS Entity List

The 164 parties that will be added to the Entity List are located in Belize, Canada, Cyprus, Estonia, Finland, Germany, Greece, Hong Kong, Kazakhstan, Russia (119 of the 164), Sweden, United Kingdom and British Virgin Islands. (There are actually 165 entries added, one of which is an alternate address for one party). 

The Entity List, found at Supplement No. 4 to Part 744 of the EAR, includes the names of non-U.S. businesses, research institutions, government organizations and individuals that have been identified as being involved in activities that merit additional scrutiny and licensing requirements. The entries on the Entity List specify the license requirements and license review policy that are applicable to shipments to each listed entity. In some cases, a license will be required to ship items classified as EAR99 to the customer, even when a license would not normally be required. In other cases, all items subject to the Export Administration Regulations will require a license. The export license review policy also varies from entity to entity. In some cases, there is a presumption of approval or denial and, in other cases, the license will be reviewed by BIS on a case-by-case basis. Exporters, freight forwarders and other parties that are involved in shipping items to parties on the Entity List without the required export license are subject to civil penalties of up to $250,000 per violation or twice the value of the underlying transaction.

In this case, the Entity List license requirement for 164 parties is “presumption of denial” and applies to “all items subject to the EAR.” As a result, an export license issued by BIS is required before any item subject to the EAR can be exported, reexported or transferred to these persons or companies, and establishes a presumption that no such license will be granted. In addition, no License Exceptions contained in the EAR can be used for exports, reexports or transfers to any of the 164 named parties.

The export license requirement will go into effect upon publication of the Entity List changes in the Federal Register, which should take place early next week. 

While the Entity List announcement contains a "saving clause" authorizing shipments of items to these parties that were en route aboard a carrier to a port of export or reexport, on the date of publication of the notice in the Federal Register, U.S. exporters and non-U.S. exporters of U.S. origin items should review the names to be added to the Entity List to ensure that there are no pending transactions with any of these parties that may be ready to be shipped. 

While restricted party screening software vendors will update their restricted party screening list databases to include these 164 new names, some software vendors will not update their databases until the notice is published in the Federal Register next week.

Finally, while Arc Electronics in Houston, Texas is not included on the Entity List since it is located in the U.S., it is recommended that Arc Electronics and the other named U.S. defendants not included on the Entity List be considered as restricted parties for export compliance purposes pending the outcome of the court proceedings (although it is my understanding that Arc Electronics was shut down today and could be added to the Denied Persons List in the future).  

Request by Law Enforcement for Assistance

In an unusual development, the press release includes the following request by the law enforcement agencies involved in this matter:

As a result of this case, there may be victims and witnesses who need to contact the agencies involved in the investigation. If your business has been approached by one of the defendants, or by someone trying to obtain export-protected, sensitive technology who appeared not to be legitimate, please report that information to businessoutreach@leo.gov. The information will remain confidential and will be handled by the appropriate authorities.

The leo.gov website is the FBI's Law Enforcement Online (LEO) system that is used to support investigations and other law enforcement communication-related activities. 

Exporters should consider consulting with qualified export controls counsel before submitting information via the LEO website.

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Date of U.S. Customs and Border Protection's 2012 Trade Symposium in Washington, DC Changed to October 29-30, 2012

U.S. Customs and Border Protection (CBP) recently announced that the 2012 East Coast Trade Symposium to be held in Washington, DC has been moved from September 27-29 to October 29–30, 2012.

Further information regarding the Symposium's agenda and online registration will be available on this page on CBP's website and registration is expected to open during mid-August.

A subscription to the live Webcast of the event will also be offered this year for those that cannot attend in person.

Because of the venue's size, CBP will limit attendance to three representatives from the same company.

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Global Customs Forum to be held in in Sao Paulo, Brazil on September 18-19,2012

The Trusted Trade Alliance (TTA) and Brazil’s International Trade Institute (ICI) are presenting the 2012 Global Customs Forum in Sao Paulo, Brazil on September 18-19, 2012.

This year’s conference, entitled “Leveraging Trade Facilitation for Latin America's Economic Growth”, will bring together key players from the public and private sectors in Brazil, countries in the broader region and from other parts of the world.

The focus of the 2012 Global Customs Forum will be on international standards for trade facilitation, on customs and border solutions directly relevant to the region’s trade growth potential and solutions to alleviate the increasing trade barriers and compliance burdens on business.

The program will be of special interest to government and multilateral policymakers, corporate executives responsible for international procurement and sales, trade compliance and customs administration, import and export, and logistics and supply chain professionals. It will also be of interest to corporate counsel, customs and trade lawyers, and service providers in the international trade field.

More information about the conference can be found on the conference website at  www.globalcustomsforum.com. The current version of the program agenda can be found here.

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BIS Posts Public Comments on Definitions of Specially Designed and Export Control Reform Transition Rule

BIS has posted on its website the public comments submitted on the proposed rules published in mid-June on the definitions of “specially designed” and the Export Control Reform Initiative transition rule. These two proposed rules are important pieces of the overall Export Control Reform puzzle and are intended to lay the groundwork for the next step in the process.

The consolidated PDF file for each of the comments can be found at the following links (note that the file sizes are quite large): 

Proposed Rule on Definition of "Specially Designed" in the Export Administration Regulations - There were 31 separate public comments submitted by individuals, companies, and trade associations on the June 19, 2012 "Specially Designed" definition proposed rule. The PDF file containing the containing the text of the proposed rule and the consolidated comments can be found here.

Export Control Reform Transition Rule - There were 26 separate public comments submitted by individuals, companies, universities and trade associations on the proposed rule issued by BIS on June 21, 2012 entitled "Proposed Revisions to the Export Administration Regulations: Implementation of Export Control Reform; Revisions to License Exceptions After Retrospective Regulatory Review." The PDF file containing the text of the proposed rule and the consolidated comments can be found here.

The State Department's Directorate of Defense Trade Controls, which also published their own separate rule on these topics, has not yet posted the public comments on its website. However, several of the documents submitted to BIS also included the comments submitted to DDTC on the ITAR-related aspects of the proposed rules. 

BIS and DDTC are expected to soon publish in the Federal Register the proposed changes to the remaining USML categories that have not yet been issued. The proposed changes to USML Category XI (Military Electronics) and the corresponding 600 Series in the Commerce Control List is expected to be the next set of proposed rules to be published.

The latest version of the Export Control List Tracker which shows the status of the USML and 600 Series categories published to date can be found here:
ECR Control List Tracker June 2012


The current version of the Export Control Dashboard, which shows the current progress of various aspects of the Export Control Reform Initiative can be found here:
Export Control Reform Dashboard (June 2012)

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