Home / News / The Export Control Update: February 2016

ECTI Announces Inaugural Export Controls Seminar for Universities, Research Labs & Research Sponsoring Companies
 

University Export Controls

DATE:  September 19-22, 2016

VENUE:  The Blackwell Inn on the campus of the Ohio State University (Columbus, OH)

Special Pricing for Public & Private Universities and Government Entities

http://LearnExportCompliance.com/university


Universities and research organizations play a vital role in the development and advancement of our most critical and sensitive technologies.  As the eye of the US Government has become more keenly focused on university export violations, the risks for these institutions have become significantly greater.  No university wants to become the poster child for university export control violations, and many programs are increasingly challenged with making sure that their compliance is up to speed.

The realities of complex regulations, increased government scrutiny, and dramatic export control reform create a real challenge for those responsible for compliance at academic and research facilities.  Balancing academic freedom for faculty and researchers with compliance -- and factoring in the issues specific to foreign national students and faculty – can be overwhelming.

The Export Compliance Training Institute is collaborating with the Ohio State University to offer a much-requested four-day comprehensive training on the ins and outs of US export control rules from the perspective of universities and research organizations.  While some conferences merely skim the surface, we will delve into the details of the ITAR, EAR, and OFAC rules as they affect the day-to-day operations of these organizations.  The comprehensive curriculum is organized to examine the issues in a thorough and methodical manner.  Novices will get comprehensive, detailed training on the key rules while experts will have a unique opportunity to master the critical nuances of the rules and hear the viewpoints of their peers on the most complex and daunting compliance challenges. 

Private companies who sponsor or work with universities and research laboratories on research projects will also benefit from this training by gaining unique and invaluable insights into the special compliance issues faced by these organizations, facilitating mutually beneficial partnerships between the academic and private sector.

Professional export compliance instructors and a number of respected panelists from the university community will lead the training, discussions and hands-on, practical exercises.  Dynamic and methodic instruction —with emphasis on active learning and case studies — will provide compliance professionals from universities, research laboratories, and private enterprise with the complete details of U.S. Export controls as they apply to the academic and research community.

John Black and Scott Gearity lead the instruction with a number of respected panelists from the university community.

 

 

 

 

Gunsmoke Goes Down in Flames: Marshal Matt Dillon Can’t Save The Day

By: Danielle McClellan

Richard Wyatt, owner of Gunsmoke, a firearm store in Wheat Ridge, Colorado has been indicted and arrested on several charges of conspiracy, dealing firearms without a license, and tax related charges. Gunsmoke was featured in the reality show, American Guns, on the Discovery Channel from 2011 through 2012. The show basically mixed the haggling of Pawn Stars with gun customizations and machine gun sales.

In April 2012, Wyatt and Gunsmoke, surrendered their Federal Firearms Licenses (FFL) after violations of federal laws and regulations (tax issues have been presumed).  In order to get around the issue of not having a FFL Gunsmoke changed the address of a store known as Triggers Firearms LLC and used it as a straw licensee. Gunsmoke never held an ownership interest in Triggers and Wyatt submitted false paperwork to the ATF to hide this fact.

During April 1, 2013 to March 31, 2015, no person/employee of Gunsmoke was licensed to engage in the business of dealing firearms. Wyatt directed all employees to ring up sales of firearms as “miscellaneous” sales to get around this issue. To further conceal sales and gunsmithing services customers would physically pay for the firearms and services from Gunsmoke but would then be sent to another firearm store (which had a valid FFL) where they would fill out their background check paperwork and take procession of the firearm purchased from Gunsmoke.

At this time Wyatt faces the following charges:

  • Two counts of conspiracy (each count carries not more than 5 years in prison and up to $250,000 fine)

  • Three counts of dealing in firearms without a license (each count carries not more than 5 years in prison and up to $250,000 fine)

  • One count of filing a false tax return (carries not more than 3 years in prison and up to a $100,000 fine)

  • Seven counts of failure to file a tax return (each count carries not more than one year in federal prison and up to a $25,000 fine)

Justice Department Notice: http://www.justice.gov/opa/pr/gunsmoke-gun-shop-owner-and-former-discovery-channel-star-indicted-and-arrested-conspiracy

 

 

 

 

 

BIS & DDTC Release Another Set of Proposed Rules on Military Aircraft

By: Danielle McClellan

BIS and Department of State simultaneously released proposed rules based on a review of Categories VII and XIX as well as ECCNs 9A610, 9A619, 9C610, 9C619, and 9E619.

BIS Revisions would be as follows:

Changes to ECCN 9A610

  • This proposed rule would remove text currently in the "Control(s)" table that excludes paragraphs .t, .u, .v and .w from national security controls. Although the text of those paragraphs is taken from the Missile Technology Control Regime Annex, the commodities that they control are unmanned aerial vehicle parts, components or associated equipment that also are subject to category ML10 on the Munitions List of the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies. The addition of the national security controls would not increase the number of destinations to which a license is required for the commodities controlled by these paragraphs as those paragraphs already have missile technology and regional stability controls. ...

Changes to ECCN 9A619

  • This rule would make three additions to the "Related Controls" paragraph. The first would state explicitly the historical practice of controlling 501-D22 gas turbine engines in ECCN 9A991.d, which is the classification that has been used for many years. The second would add a reference to USML Category XIX(f) to alert readers that some aircraft parts and components are enumerated in that paragraph. Finally, a note would be added reminding readers that the commodities enumerated in paragraph .y are subject to the controls in that paragraph rather than the broader controls elsewhere in this ECCN. ...

Changes to ECCN 9C610

  • ECCN 9C610 would be revised by adding references to USML Category VIII in both the heading and in paragraph .a, to make clear that materials specially designed for commodities enumerated or otherwise described in that category are controlled in ECCN 9C610.

Changes to ECCN 9C619

  • ECCN 9C619 would be revised by adding references to USML Category XIX in both the heading and in paragraph .a, to make clear that materials specially designed for commodities enumerated or otherwise described in that category are controlled in ECCN 9C619.

Change to ECCN 9E619

  • The related controls paragraph in ECCN 9E619 would be amended by removing the sentence that reads "Technology described in ECCN 9E003 is controlled by that ECCN." Although true, the placement of the sentence in a 600 series ECCN could mislead readers into thinking that the order of review does not apply in this instance.

Comments must be received by BIS by March 25, 2016. You may submit comments by any of the following methods:

  • Federal eRulemaking Portal: http://www.regulations.gov. Search for this rule using its regulations.gov docket number: BIS-2016-0009.

  • By email directly to publiccomments@bis.doc.gov. Include RIN 0694-AG76 in the subject line.

  • By mail or delivery to Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW., Washington, DC 20230. Refer to RIN 0694-AG76.

  • FOR FURTHER INFORMATION CONTACT: Thomas DeFee or Jeffrey Leitz in the Office of Strategic Industries and Economic Security, Munitions Control Division by telephone at (202) 482-4506 or by email at Thomas.DeFee@bis.doc.gov or Jeffrey.Leitz@bis.doc.gov.

     

Department of State Revisions would be as follows:

Revision of Category VIII

This proposed rule revises USML Category VIII, covering aircraft and related articles, to describe more precisely the articles warranting control on the USML.

  • Paragraph (a) is revised to clarify that the controls for all paragraphs are applicable "whether manned, unmanned, remotely piloted, or optionally piloted," by modifying paragraph (a)(5) to clarify the features meriting USML control, and by deleting paragraph (a)(6) and placing it into reserve, because the relevant control would be subsumed by paragraph (a)(5).

  • Paragraphs (a)(7) and (a)(8) are modified to clarify the features meriting USML control.

  • Paragraphs (a)(11) and (a)(13) are deleted and placed into reserve.

  • Paragraph (a)(14) is modified to exclude L-100 aircraft manufactured prior to 2013 from the scope of control.

  • The Note to paragraph (a) is revised to incorporate technical corrections.

  • Paragraph (d) is modified to delete the "ship-based" control parameter and to clarify the intent and scope of the control.

  • Notes 1 and 3 to paragraph (f) are modified to incorporate clarifying language. ...

Revision of Category XIX

This proposed rule revises USML Category XIX, covering gas turbine engines and associated equipment, to describe more precisely the articles warranting control on the USML.

  • Paragraph (a) is modified to clarify the scope of controlled engines and to incorporate technical corrections.

  • Paragraph (b) is revised to provide additional technical parameters to clarify the scope of controlled engines. With respect to paragraph (b)(1), public comment is requested on whether any commercial models exceed the capability described in this paragraph. In any public comment submitted in reply to this request, please provide specific examples of the commercial models at issue.

  • Paragraph (c) is modified to incorporate conforming changes and to make clear that the paragraph applies only to gas turbine engines, while paragraph (d) is modified to update the list of subject engines.

  • The Note to paragraph (e) is modified to incorporate a conforming change.

The Department of State will accept comments on this proposed rule until March 25, 2016. Interested parties may submit comments within 45 days of the date of publication by one of the following methods:

  • Email: DDTCPublicComments@state.gov with the subject line, "ITAR Amendment--Categories VIII and XIX."

  • Internet: At www.regulations.gov, search for this notice by using this rule's RIN (1400-AD89).

  • Comments received after that date will be considered if feasible, but consideration cannot be assured. Those submitting comments should not include any personally identifying information they do not wish to be made public or information for which a claim of confidentiality is asserted, because those comments and/or transmittal emails will be made available for public inspection and copying after the close of the comment period via the Directorate of Defense Trade Controls Web site at www.pmddtc.state.gov. Parties who wish to comment anonymously may do so by submitting their comments via www.regulations.gov, leaving the fields that would identify the commenter blank and including no identifying information in the comment itself. Comments submitted via www.regulations.gov are immediately available for public inspection.

  • FOR FURTHER INFORMATION CONTACT: Mr. C. Edward Peartree, Director, Office of Defense Trade Controls Policy, Department of State, telephone (202) 663-2792; email DDTCPublicComments@state.gov. ATTN: ITAR Amendment--USML Categories VIII and XIX.

 

 

 

 

 

 

Tips on How to Resolve AES Fatal Errors

(Source: census@subscriptions.census.gov, 18 Feb 2016)

When a shipment is filed to the AES, a system response message is generated and indicates whether the shipment has been accepted or rejected. If the shipment is accepted, the AES filer receives an Internal Transaction Number (ITN) as confirmation. However, if the shipment is rejected, a Fatal Error notification is received.

To help you resolve AES Fatal Errors, here are some tips on how to correct the most frequent errors that were generated in AES for this month.

Fatal Error Response Code: 123

  • Narrative: Conveyance Name Missing

  • Reason: The Conveyance Name/ Carrier Name is missing when the Mode of Transportation reported is one that requires the Conveyance Name/ Carrier Name to be Reported.  

  • Resolution: The Conveyance Name/ Carrier Name must be reported for Vessel, Air, Rail, and Truck shipments. For Vessel shipments, report the name of the vessel. For Air, Rail, and Truck shipments, report the name of the carrier. Verify the Mode of Transportation Code and Conveyance Name/ Carrier Name, correct the shipment and resubmit.    

Fatal Error Response Code: 133

  • Narrative: Port of Export Must Be An Air Port

  • Reason: The Port of Export reported is not allowed for Air shipments.  

  • Resolution: The Port of Exportation Code reported must accommodate the mode of transport reported in the shipment. See Appendix D, Export Port Codes for a list of acceptable Port of Exportation Codes and their corresponding modes of transportation. Verify the Port of Exportation code and Mode of Transportation Code combination, correct the shipment and resubmit.    

For a complete list of Fatal Error Response Codes, their reasons, and resolutions, see Appendix A - Commodity Filing Response Messages.

It is important that AES filers correct Fatal Errors as soon as they are received in order to comply with the Foreign Trade Regulations. These errors must be corrected prior to export for shipments filed predeparture and as soon as possible for shipments filed postdeparture, but not later than five calendar days after departure.

For further information or questions, contact the U.S. Census Bureau's Data Collection Branch.

 

 

 

 

 

 

Congress Throws Political Barbs on Export Control Reform for Guns & Ammo

(Source: House video recording)

The House Small Business Committee held a hearing yesterday, 11 February, 2016, on the Export Control Reform (ECR) initiative, with testimony from the State Department's Deputy Assistant Secretary for Defense Trade Controls (DDTC) Brian Nilsson and the Commerce Department's Assistant Secretary of Commerce for Export Administration Kevin Wolf. The video recording of the full hearing is available here. The following is a transcript of a portion of that hearing containing the remarks of Rep. Tim Huelskamp (R-Kansas), Assistant Secretary Brian Nilsson, and Committee Chair Steven J. Chabot (R-Ohio), which focused on the reasons for the delay in publication of proposed rules to transfer export licensing jurisdiction for our industry's products (USML Categories I [Firearms, Close Assault Weapons, and Combat Shotguns], II [Guns and Armament], and III [Ammunition/Ordinance]) to BIS from DDTC before the end of the year.

Rep. Huelskamp (to Mr. Nilsson): What is taking so long with Categories I, II, and III? I see from the government website absolutely no efforts reported on that. That would be the firearms, guns, and ammunition categories. I will note that you completed [names other categories], but for some reason, Categories I, II, and III have been sitting out there for two, three, or four years. I don't know who would answer that and explain the reason for the delay.
 

Mr. Nilsson: I own those categories, so I'll answer the question. The prioritization of the categories was based on the remarks of Secretary of Defense Gates when we did the roll-out in April of 2010. Sec Def's view was that we needed to prioritize, based on interoperability with allies. So the categories that we've been doing have been based on providing the best benefits of interoperability with our key allies, and so, and we've been systematically working through those. And so we haven't come to Categories I, II, and III yet. We've done some preliminary work on them, but we’re committed to finalizing all the categories this year.

Rep. Huelskamp: Is there an interagency group that recommended that you move forward on that?
Mr. Nilsson: Yes. It's the same seven departments that have been working on all the categories. And so we've already done some, we've done work on all twenty-one categories from the out-start, so we’re just not quite there yet for publishing the proposed rules.

Rep. Huelskamp: But exactly why are those categories not making progress, and when will we make progress?
Mr. Nilsson: Well, we’re committed to publishing, to finishing the initial review and having those categories done this year. The primary reason is that --

Rep. Huelskamp: This year?
Mr. Nilsson: Yes, 2016.

Rep. Huelskamp: But this year, you're going to run out of time. Again, there is absolutely no progress. You've got propose rules in 2011, five years ago for, like, Category VIII, and, it's going - - I just don't understand why those three have had absolutely no progress, in terms of this sheet [holding up USML category ECR progress status list], even though there have been recommendations from the interagency group that you move forward. When was that recommendation made?
Mr. Nilsson: We were working on rules in 2012, and so, on all twenty-one categories, and it's been a prioritization of those twenty-one categories, and sort of meeting the Secretary of Defense priorities for those that contribute to the interoperability, and the firearms categories - -

Rep. Huelskamp: Again, it's been with the Secretary of Defense for a while now, but my question is that I still don’t understand why these three categories don’t have any progress on them.
Mr. Nilsson: Primarily because, by prioritizing those that are key for interoperability of allies, and our firearms categories, that category warrants reform just as all the other categories, but over 90% of what I control in that category are not being exported to governments or militaries, and so there is not an interoperability issue with regard to those. But that begs the question that they certainly warrant going through reform, just as all other sectors warrant going through reform, so for the industries that have not yet benefitted going through reform, that’s firearms, that’s the large manufacturers of things like howitzers, its people who do toxicological agents, do chemicals, and so we, we will finish - -

Rep. Huelskamp: Categories I through III?
Mr. Nilsson: Those are all in categories that have not been deployed in final.

Rep. Huelskamp: But some of those are not in I, II, or III, obviously, but you’ve made a proposed rule on a number of those already. My question is on Categories I, II, and III. When can I expect - -
Mr. Nilsson: This year.

Rep. Huelskamp: This year? This Administration?
Mr. Nilsson: We will finish -- we are going to finish the USML this year.

Rep. Huelskamp: Haven't the rules been approved all the way up the chain and proposed those?
Mr. Nilsson: They haven’t been finalized yet, so - -

Rep. Huelskamp: Who hasn't signed off on them yet?
Mr. Nilsson: The seven departments haven’t signed off on those for what the rules would propose, but we're committed to doing the proposed rules on those categories, as all other categories.

Rep. Huelskamp: There are firms that are waiting on this, and have been waiting for years trying to fix - -
Mr. Nilsson: I agree.

Rep. Huelskamp: And you were given, I think you were, $10 million additional to finish some of these things, in the current fiscal year. So are you going to get it done in the current fiscal year, or are you talking about the next fiscal year before you would get it done? You say current year. I just - -
Mr. Nilsson: We need to go through, the way the process works is, we do proposed rules, then we digest the public comments on those to see what adjustments we need to make, then at that point, we would draft final rules, then we publish final rules, and then there is a delay in the effective date, to allow each affected industry to be able to have time to transition to the new rules, and so that’s the process for every category. So that process will run for Categories I, II, and III, just as we’re in the midst of Categories XII, XIV, and XVIII.

Rep. Chabot: The gentleman’s time has expired. [Side remarks omitted.] The Chair would just note that there is considerable, I think, suspicion by many members, at least probably half the members on this committee, that this Administration, because it is not considered to be a friend of guns or ammo, that this is sort of a willful neglect in part at least, and the irony is that it is because of this attitude towards, and concern about the Administration’s attitude toward guns, that there has been a boom in sales of guns and ammo during this Administration, so I think that’s probably the underlying sentiment of my colleague’s questioning there.

[Remainder of hearing omitted.]

House Video Recording: https://www.youtube.com/watch?v=9uRZEXrmoss&feature=youtu.be

 

 

 

 

 

Barclays Bank PLC Pays $2,485,890 to Settle Zimbabwe Sanctions Violations

By: Danielle McClellan

Barclay’s Bank PLC, headquartered in London, has agreed to pay $2,485,890 to settle a potential civil liability for 159 apparent violations of the Zimbabwe Sanctions Regulations (§ 541.201) between July 2008 and September 2013. Barclay’s processed 159 transactions totaling around $3,375,617 to or through financial institutions located in the US on behalf of corporate customers of Barclays Bank of Zimbabwe. These customers were found to have been owned by 50 percent or more, directly or indirectly, by a person identified on the US Department of the Treasury’s OFAC List of Specially Designated Nationals and Blocked Persons (SDN List).

Barclays Bank of Zimbabwe Limited (BBZ) implemented an electronic customer system in 2006 that prevented it from screening beneficial ownership information for its corporate customers. The only information the bank captured was that of the customer, not of any related parties such a beneficial owner of the customer. Over the years the Barclay’s continued to try and  find a work around for the issue but it wasn’t until 2013 that system was fixed.

The base penalty amount for these violations was $5,029,000, OFAC released the following they used in consideration when reaching the settlement amount:

OFAC found the following to be aggravating factors in this case:

  • Although Barclays attempted to comply with OFAC sanctions despite various constraints imposed by the local Zimbabwean authorities, Barclays failed to implement adequate controls to prevent the apparent violations from occurring despite numerous warning signs that its conduct could lead to a violation of U.S. sanctions laws;

  • Multiple business lines and personnel within Barclays, including supervisory and management staff in the bank's Compliance and Audit functions, had actual knowledge or reason to know of the conduct that led to the apparent violations (including the bank's awareness of the limitations of the systems used by BBZ with respect to capturing full information concerning the beneficial ownership of certain of its corporate customers);

  • Barclays processed 159 funds transfers totaling approximately $3,375,617 that conferred economic benefit to, and provided indirect access to the U.S. financial system for, blocked persons, causing harm to the Zimbabwe sanctions program and its associated policy objectives;

  • Barclays is a large and commercially sophisticated international financial institution; and

  • Barclays' compliance program was inadequate to identify BBZ's customers as blocked persons and/or prevent the apparent violations from occurring.

 

OFAC considered the following to be mitigating factors:

  • Barclays has not received a penalty notice or Finding of Violation in the five years preceding the earliest date of the transactions giving rise to the apparent violations;

  • Barclays took remedial action in response to the apparent violations; and

  • Barclays substantially cooperated with OFAC's investigation by submitting detailed and organized information, and by executing a statute of limitations tolling agreement and an extension to the agreement.

 

OFAC also considered the fact that the prohibited entities were not publicly identified or designated and included on the SDN List at the time that Barclays processed transactions for or on their behalf.

Notice: https://www.treasury.gov/resource-center/sanctions/CivPen/Documents/20160208_barclays.pdf

 

 

 

 

 

Johnson and Johnson Receives Finding of Violation from OFAC

By: Danielle McClellan

OFAC recently issued a Finding of Violation (FOV) to Johnson and Johnson (Middle East) Inc., a US company incorporated in New Jersey and a wholly owned subsidiary of Johnson & Johnson for violations of the Sudanese Sanctions Regulations (31 C.R.R part 538). Between March and October 2010 Johnson and Johnson Middle East violated §538.206 when it facilitated the exportation of goods to Sudan by coordinating and supervising shipments of goods from Johnson and Johnson Egypt S.A.E. to Khatoum, Sudan.

In November 2009 Johnson and Johnson Middle East became involved in the business planning and supervision of Johnson and Johnson Egypt. Five shipments to Sudan, with a value of approximately $227,818, were coordinated and supervised by a General Manager who was unfamiliar with US Sanctions. He received no training on OFAC compliance even though he was responsible for sales in the Middle East and North Africa, including Sudan.

The determination to issue a Finding of Violation to Johnson and Johnson Middle East was made in consideration of the following:

Aggravating factors:

  • JJME acted with reckless disregard for U.S. sanctions requirements when it made two exports to Sudan after being made aware that it might be subject to restrictions under U.S. sanctions;

  • JJME's General Manager for Emerging Markets in the Middle East and North Africa was both aware of and involved in the conduct giving rise to the violations;

  • JJME is part of a large, sophisticated corporation with extensive experience in international trade; however, it did not properly take into consideration the implications of OFAC regulations when it restructured its consumer business and placed a U.S. company in charge of sales to Sudan; and

  • JJME's OFAC compliance program did not include any training on OFAC regulations for its General Manager, who was responsible for sales to Sudan.

OFAC considered the following to be mitigating factors:

  • JJME took remedial action including conducting an internal investigation of the violations and instituting additional compliance training;

  • the harm to sanctions programs objectives was limited because the products exported, while not authorized by OFAC, were consumer hygiene products;

  • JJME has no prior OFAC sanctions history, including no penalty notice or Finding of Violation in the five years preceding the date of the earliest transaction giving rise to the violations; and

  • JJME cooperated with OFAC's investigation, including by providing detailed and well-organized information.

For a copy of OFAC's Finding of Violation issued to JJME, please go here.

 

 

 

 

 

Is the ITAR is Unconstitutionally Vague?

By: Danielle McClellan

A Washington, DC lawyer thinks so and filed suit against the US Department of State. Matthew A. Goldstein, whose law practice focuses on International Trade, filed a suit in Federal Court after a 2013 Interim Final Rule was unclear on whether or not some lawyers’ activities fall within the regulatory definition of “brokering activities” because “export compliance advice frequently includes advice on how to structure transactions involving sales of defense articles and assistance in the preparation of contracts and other documents for such transactions.” As a lawyer, if Goldstein was considered to be a “broker” he would be required by the ITAR to disclose violations; this however would cause him to violate the District of Columbia Rule of Professional Conduct (attorney/client privilege).

After the rule was published in the Federal Register Goldstein sent a letter to Daniel Cook, the Directorate’s Chief of the Compliance, Registration, and Enforcement Division requesting the following guidance on what would be considered “brokering activities”:

  1. Advising how to structure transactions involving the sale of defense articles and defense services, to include advising how to structure sales, mergers, acquisitions, and divestitures that involve the transfer of defense articles and defense services;

  2. Preparing contracts for the sale of defense articles and defense services, to include clauses, parts, and other provisions to contracts, as well as letters of intent, nondisclosure, and other documents incidental to contracts for sale, mergers, acquisitions, and divestitures;

  3. Advising on and preparing technical assistance agreements and other Part 124 agreements, to include advising on how to structure the involvement of subcontractors, sub-licensees, and other parties to Part 124 agreements;

  4. Advising on the availability of financing for export sales of defense articles and defense services, and preparation of legal documents required by financial institutions for financing of export sales of defense articles and defense services;

  5. Advising on proposals to broker and sell defense articles and defense services and preparing proposals and clauses, parts, and other provisions to proposals; and

  6. Corresponding and meeting with U.S. government personnel regarding licensing policy and specific requests to export defense articles and defense services.

A year later Cook and Goldstein communicated via phone where Goldstein claims that Cook advised that, “so long as no fee arrangements are {made} on a commission or contingency basis,’ the “legal services described in Goldstein’s request are not subject to Part 129.” Months later Goldstein received a letter from Cook stating that the conversation that they had, “lacked sufficient detail for the Department to make an official determination as to whether the activities discussed constituted brokering activities.” Goldstein then filed suit a few days later on March 5, 2015.

Last month the Federal Court dismissed the case. Read all of the details at: https://goldsteinpllc.files.wordpress.com/2015/06/25-1-def-mtd-points-authorities.pdf

 

 

 

 

 

A Few Things That Can Be Exported to Cuba

By: Danielle McClellan

BIS has released a final rule revising the licensing policy from possible approval on a case-by case-basis to a general policy of approval for exports and reexports of the following to Cuba:

  • Telecommunications items that would improve communications to, from, and among the Cuban people;

  • Certain commodities and software to human rights organizations or to individuals and non-governmental organizations that promote independent activity intended to strengthen civil society in Cuba;

  • Commodities and software to U.S. news bureaus in Cuba whose primary purpose is the gathering and dissemination of news to the general public; and

  • Agricultural items that are outside the scope of "agricultural commodities" as defined in part 772 of the EAR (such as insecticides, pesticides and herbicides) as well as agricultural commodities not eligible for License Exception Agricultural commodities (AGR) (such as those that are specified in an entry on the Commerce Control List, i.e., are not designated EAR99).

  • Items that are necessary to ensure the safety of civil aviation and the safe operation of commercial aircraft engaged in international air transportation, including the export or reexport of such aircraft leased to state-owned enterprises. Given a substantial increase in air travel to and from Cuba, BIS is making the change to emphasize the importance of civil aviation safety and to recognize that access to aircraft used in international air transportation that meet U.S. Federal Aviation Administration and European Aviation Safety Agency operating standards by Cuban state-owned enterprises contributes to that safety.

This rule also amends the exceptions to the general policy of denial by also adopting a case-by-case review policy for exports and reexports of some of the following:

  • Exports and reexports to state-owned enterprises, agencies, and other organizations of the Cuban government that provide goods and services for the use and benefit of the Cuban people.

  • Exports and reexports of items for agricultural production, artistic endeavors (including the creation of public content, historic and cultural works and preservation), education, food processing, disaster preparedness, relief and response, public health and sanitation, residential construction and renovation and public transportation.

  • Exports and reexports of items for use in construction of: facilities for treating public water supplies, facilities for supplying electricity or other energy to the Cuban people, sports and recreation facilities, and other infrastructure that directly benefits the Cuban people.

  • Additionally, it includes exports and reexports to wholesalers and retailers of items for domestic consumption by the Cuban people.

The rule also adds the term “reexport” to the existing statement of a policy of case-by-case review of applications for aircraft or vessels on temporary sojourn to Cuba. Finally, this rule will consolidate the statements of licensing policy for exports and reexports to Cuba (previously the policies were in six different paragraphs spread in different places with inconsistent wording).

Additionally, OFAC released a final rule coordinating with these changes set forth by BIS. OFAC is making amendments to the Cuba Sanctions Regulations with respect to non-agricultural export trade financing and travel and related services:

  • Section 515.533(a) will remove the former limitations on payment and financing terms for all exports from the United States or reexports of 100 percent U.S.-origin items from a third country that are licensed or otherwise authorized by the Department of Commerce, other than exports of agricultural items or commodities. As required by the Trade Sanctions Reform and Export Enhancement Act of 2000, 22 U.S.C. 7207(b)(1), such agricultural exports continue to be authorized only if one of the payment and financing terms specified in the statute are used.

  • Section 515.584 will add an authorization for depository institutions to provide financing for such authorized exports and making a conforming change to section 515.421.

  • Carrier services by air: section 515.572 will be amended to authorize the entry into blocked space, code-sharing, and leasing arrangements to facilitate the provision of carrier services by air authorized pursuant to section 515.572(a)(2), including the entry into such arrangements with a national of Cuba.

  • Temporary sojourn: section 515.533 will be amended to authorize travel-related and other transactions directly incident to the facilitation of the temporary sojourn of aircraft and vessels as authorized by the Department of Commerce for travel between the United States and Cuba, including by certain personnel required for normal operation and service on board a vessel or aircraft or to provide services to a vessel in port or aircraft on the ground.

  • Transactions related to information and informational materials: section 515.545 will be  expand the general license authorizing travel- related and other transactions that are directly incident to the export, import, or transmission of informational materials to include professional media or artistic productions in Cuba. Such productions include media programs (such as movies and television programs), music recordings, and the creation of artworks. OFAC is removing a restriction in an existing general license and explicitly authorizing transactions relating to the creation, dissemination, or artistic or other substantive alteration or enhancement of informational materials, including employment of Cuban nationals and the remittance of royalties or other payments. OFAC also is making a conforming change to section 515.206.

  • Professional meetings: section 515.564 will now authorize travel-related and other transactions to organize professional meetings or conferences in Cuba.

  • Public performances, clinics, workshops, athletic and other competitions, and exhibitions: section 515.567 will now authorize travel-related and other transactions to organize amateur and semi-professional international sports federation competitions and public performances, clinics, workshops, other athletic or non-athletic competitions, and exhibitions in Cuba. OFAC is also removing the existing requirements for certain events that all U.S. profits from the event after costs be donated to an independent nongovernmental organization in Cuba or a U.S.-based charity and that workshops and clinics be organized and run, at least in part, by the authorized traveler.

  • Humanitarian projects: section 515.575 will expand the list of authorized humanitarian projects to include disaster preparedness and response.

BIS Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-01-27/pdf/2016-01557.pdf

OFAC Notice: https://www.gpo.gov/fdsys/pkg/FR-2016-01-27/pdf/2016-01559.pdf

 

 

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