Archive for 2009

Electronic Applications for Agreements Are Here

2009/12/19

By: Danielle McClellan

DDTC recently announced that starting October 19, 2009 they will be allowing US applicants to submit agreements electronically via the D-Trade 2 application. D-Trade 2 will be the means for submitting, reviewing, and approving agreement proposals. The system uses the DSP-5 tool to transition agreements and their respective amendments from on phase of the adjudication process to the next.

At this time only new agreements and re-baselined agreements may be submitted using D-Trade 2. Amendment proposals for paper agreements must be submitted via paper. Once an electronic agreement is approved, then electronic amendments to that approval may be submitted. DDTC will continue to accept both paper and electronic agreements but do expect to make electronic submissions mandatory for all applicants by fall 2010. So the rule of thumb is if your agreement was submitted via paper so will the amendments to that agreement.

DDTC has also encourage applicants to thoroughly read and review the Guidelines for Preparing Electronic Agreements (Coordinating Draft-3) dated October 7, 2009 before attempting to submit an electronic agreement.
Web Notice: http://pmddtc.state.gov/licensing/documents/WebNotice_ElectronicAgreements.pdf


BIS Clarifies ECCNs 2B116 and 2B101

2009/11/09

By: Danielle McClellan

BIS is once again amending the EAR. In November 2008 the Missile Technology Control Regime (MTCR) members determined that it was necessary to clarify the controls related to ECCN 2B116, more directly to clarify that systems capable of a range of at least 300km, regardless of payload capacity fall under 2B116.  In order to make this jive with the current Regulations, BIS has issued a final rule adding, “capable of a range of at least 300 km” to ECCN’s 2B101 and 2B116.

This change is effective November 9, 2009. BIS has stated that “shipments of items removed from eligibility for a license exceptions or NLR as a result of this ruling that were on dock for loading, on lighter, laden aboard an exporting or reexporting carrier, or en route abroad a carrier to a port of export/reexport on November 9, 2009 pursuant to actual orders for export/reexport to a foreign destination may proceed to that destination under the previous eligibility for a license exception or NLR as long as they are exported/reexported before December 9, 2009.”

Federal Register: http://edocket.access.gpo.gov/2009/E9-26961.htm


Senate Banking Committee wants Tougher Trade Sanctions on Iran

2009/11/02

By: Danielle McClellan

On October 29 The Senate Banking Committee unanimously approved legislation that, if it ever becomes a law,  would strengthen economic and trade sanctions against Iran. The Comprehensive Iran Sanctions, Accountability and Divestment Act would strengthen the Treasury Department’s ban on trade with Iran. The act includes the following provisions:

• The US will be required to help Iran’s trading partners strengthen their export controls to prevent illegal black market exports to Iran via third countries and to put significant restrictions on exports if they refuse US assistance.
• The US government will be prohibited from contracting with companies that export sensitive communications jamming or monitoring technology to Iran.
• Sanctions will be expanded for financial institutions, foreign subsidiaries, insurers, export credit agencies and foreign companies who invest over $20 million in Iran’s oil and gas sector.
• The White House will be required to give Congress a list of the companies that are sanctionable under the Iran Sanctions Act and whether or not those sanctions will be applied.
• The US government is prohibited from purchasing good from companies that are sanctionable under the Iran Sanctions Act.
• The president will be required to sanction companies that are involved in exporting refined petroleum products to Iran or in other developing oil refineries within Iran.
It is too early to tell whether any of these things will ever become part of US law.

Bill: http://www.strtrade.com/wti/2009/november/02/iran_sanctions_bill.pdf


Treasury Announces Countries Enforcing Boycott on Israel

2009/10/30

By: John Black

The Department of Treasury released a list of countries that “may require participation in, or cooperation with, an international boycott (meaning of section 999(b)(3) of the Internal Revenue Code of 1986).” The following countries have been named on the list:

• Kuwait
• Lebanon
• Libya
• Qatar
• Saudi Arabia
• Syria
• United Arab Emirates
• Yemen, Republic of

Iraq is not included on this list but the Department of Treasury will continue to review its status and it may be added to a future list. This list is published for use by US companies as an advisory that it is quite possible that companies in the above mentioned countries may require participation in a boycott which would be a violation of the Regulations.

The Treasury Department announcement technically applies to the antiboycott provisions of the IRS tax code and not to the antiboycott provisions in the Export Administration Regulations *EAR).  But, as a practical matter, if you are trying to comply with the EAR antiboycott rules, these listed countries are a good place to focus your compliance resources—if you do a good job with these countries, then you may use your antiboycott compliance resources for other countries.

Federal Register: http://edocket.access.gpo.gov/2009/E9-27063.htm


$450,000 Penalty ($400,000 Suspended) for Illegal Valve and Pump Exports

2009/10/30

By: Danielle McClellan

FSI International, Inc. was charged with 66 violations of the EAR after the company voluntarily self disclosed the violations to BIS earlier this year. The charging letter stated that between 2003 and 2006 FSI exported fluoropolymer-coated valves and pumps from the US to China, Israel, Malaysia, Taiwan, and Singapore. The valves and pumps are classified 2B350 for chemical and biological weapons proliferation reasons.

FSI was fined $450,000 in conjunction with the 66 violations, but don’t feel too sorry for them. The Order states that FSI will have to pay $50,000 over a period of 9 months ($5,000 per month) and the remaining $400,000 will be suspended as long as FSI doesn’t commit any violations in the next year.

Order: http://efoia.bis.doc.gov/exportcontrolviolations/e2141.pdf


UAE Firms Pays $44,625 Fine for Antiboycott Violations

2009/10/30

By: Danielle McClellan

M-I Production Chemicals of the UAE has been charged with 20 violations of the EAR and a $44,625 fine. The company didn’t export anything illegally, but did agree to prohibited antiboycott activities in conjunction with the sale of goods/services (the charging letter doesn’t state which) from the US to Syria.

Many of you may be asking why is a foreign company is charged with breaking US antiboycott laws, well M-I Production Chemicals (MIPC) is a “controlled-in-fact foreign affiliate” of M-I LLC of Delaware. This means that the US parent company operates and/or has control over the foreign subsidiary, an important reminder to foreign companies who are controlled by their US parent company.

MIPC was charged with 10 violations of furnishing information about their business relationships with other boycotted countries; prohibited under 760.2(d) of the Regulations. They were also charged with 5 violations of refusing (or agreeing to refuse) to do business with another country/entity. In conjunction with these charges BIS also tacked on an additional 5 violations for failing to comply with reporting requirements under 760.5 of the Regulations. The Regulations require that any time you receive a request to support a restrictive trade practice against a country friendly to the US or against a US person you must report the request to the Department of Commerce.

Order: http://efoia.bis.doc.gov/antiboycott/Violations/TOCAntiboycott.html


$91,000 Oscilloscopes to Pakistan Nets $125,000 Fine

2009/10/30

By: Danielle McClellan

Utech Product’s Inc. was recently charged with 3 violations of the EAR. The charging letter explains that the New Jersey company failed to get a license for 3 exports of oscilloscopes to Pakistan. The oscilloscopes are classified under ECCN 3A292 and are controlled for nuclear nonproliferation reasons. The charging letter stated that the exports were valued at $91,000; BIS fined the company $125,000 for the violations. Looks like they won’t be making a profit on that export.

Charging letter: http://efoia.bis.doc.gov/ExportControlViolations/TOCExportViolations.htm


DDTC Revises Electronic DSP-61 to Allow Multiple Foreign Intermediate Consignees

2009/10/23

By: Danielle McClellan

DDTC recently published a web notice stating that the DSP-61 PureEdge form has been fixed and Block 20-Foreign Intermediate Consignee will now allow users to include additional parties on the form. Previously the “add” feature on Block 20 included 12 separate Name and Address blocks, all of which were not functional, but are now. The new form will fall under version 3.1 and will be implemented on October 23, 2009.

Inquiries regarding the new form should be sent to: Kwaku Pipim: 202-663-2282 or pipimka@state.gov, or Kathryn Wilderotter: 202-261-8598 or widerotterkl@state.gov.

Web Notice: http://pmddtc.state.gov/documents/IndustryNotice-DSP61.pdf


Businessman Pleads Guilty to Illegal Bribes

2009/10/22

By: Danielle McClellan

Joseph T. Lukas, a partner in Nexus Technologies Inc., has pled guilty in connection with a conspiracy to bribe Vietnamese government officials. Nexus was a privately owned export company that found US vendors for Vietnamese government contracts that involved underwater mapping equipment, bomb containment equipment, helicopter parts, chemical detectors, satellite communication parts and air tracking systems. Lukas was in charge of the negotiations of these contracts with US suppliers. The Vietnamese officials included the commercial branches of Vietnam’s Ministries of Transport, Industry and Public Safety.

Lukas admitted that from 1999 to 2005, he and other Nexus employees agreed to, and paid, bribes to Vietnamese government officials in order to obtain contracts. These bribes were covered up as “commissions” in Nexus’s accounting records. Court records indicate that Nexus paid over $150,000 to Vietnamese officials over the 6 year period.

Lucas has been indicted for one count of conspiracy to bribe Vietnamese public officials, in violations of the Foreign Corrupt Practices Act (FCPA) along with Nexus and co-conspirators Nam Nguyen, Kim Nguyen and An Nguyen. Cases are still pending against the other defendants and Nexus. Lukas is scheduled for sentencing on April 6, 2010 and faces a maximum sentence of 10 years in prison and $350,000 fine.

More information:


DDTC Waives Amendment Requirements for Specified Name Changes and Acquisitions

2009/10/22

By: John Black

The Directorate of Defense Trade Controls in the State Department has announced several instances when a company name change (sometimes involving an acquisition) will not require that license and agreement holders follow the burdensome ITAR requirements for amending or replacing outstanding licenses or agreements.

These announcements will save a great deal of work for DDTC and the parties involved in the impacted licenses and agreements.

Here are the most recent announcements:

Persides Limited has changed its name to Persides Consultancy Services Limited. DDTC has decided to exercise its right to waive the current requirement for amendments to change currently approved authorizations. All currently approved DSP authorizations which identify Persides Limited will not require an amendment for the name change but must attach a copy of the DDTC website notice to the approved DSP and the notice must be presented with the license to Customs & Border Protection at the time of shipment. The agreement holder will be responsible for amending their approved agreement as a minor amendment per 22 CFR 124.1(d).

Any pending authorizations which have already been received by DDTC will still be reviewed and adjudicated and a copy of the website notice must be attached to the approved license. New license applications received by DDTC after August 1, 2009 will be RWA for name change correction.

DDTC Website Notice (DOC)


Hispano Suiza Regulations System Division: was acquired and the company will now be known as Snecma SA. DDTC has decided to waive the requirement for an amendment to change currently approved authorizations.All currently approved DSP authorizations which identify Hispano Suiza Regulation Systems will not require an amendment to reflect the new name change. A copy of the DDTC website notice must be attached to the approved licenses and must be presented with the relevant license to Customs & Border Protection at the time of shipment.

Pending authorizations that name Hispano Suiza Regulation Systems Division will still be reviewed and if approved will require the website notice to be attached. Any new license applications received after June 2, 2009 will be RWA for name correction.

All currently approved agreements will require a minor amendment per 22CFR 124.1(d), the responsibility of the agreement holder.

DDTC Website Notice (DOC)


MacDonald, Dettwiler and Associates, Ltd. (MDA Ltd.) will change as follows: MDA Systems Ltd. Due to the volume of authorizations requiring amendments to reflect this change, the Managing Director of DDTC is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved authorizations.All currently approved DSP authorizations identifying MDA Ltd. will not require an amendment to reflect the name change to MDA Systems. A copy of this website notice must be attached to the currently approved license by the license holder.

Pending authorizations received by DDTC identifying MDA Ltd. as a party to the license will be adjudicated without prejudice. A copy of this website notice must be attached to the approved license by the license holder.

New license applications received after Oct 1, 2009 identifying MDA Ltd. as a party to the license will be considered for return without action for correction to the new name.

A copy of the website notice must be maintained by the license holder and presented with the relevant license to Customs at time of shipment.

All currently approved agreements will require an amendment to be executed to reflect this name change. The agreement holder will be responsible for amending their agreement. The executed amendment will be treated as a minor amendment per 22 CFR 124.1(d) and must be submitted as such.

Pending agreement applications that require amending must be brought to the attention of the assigned Agreements Officer by the agreement holder. The necessary changes will be made prior to issuance when the Agreements Officer has been notified.

DDTC Website


Hawker De Havilland Aerospace Pty Limited: will change as follows: Boeing Aerostructures Australia Pty Limited. Due to the volume of authorizations requiring amendments to reflect this change, the Managing Director of DDTC is exercising the authority under 22 CFR 126.3 to waive the requirement for amendments to change currently approved authorizations.All currently approved DSP authorizations identifying Hawker De Havilland Aerospace Pty Limited will not require an amendment to reflect the name change to Boeing Aerostructures Australia Pty Limited]. A copy of this website notice must be attached to the currently approved license by the license holder.

Pending authorizations received by DDTC identifying [old name] as a party to the license will be adjudicated without prejudice. A copy of this website notice must be attached to the approved license by the license holder.

New license applications received after May 1, 2009 identifying Havilland Aerospace Pty Limited as a party to the license will be considered for return without action for correction to the new name.

A copy of the website notice must be maintained by the license holder and presented with the relevant license to Customs at time of shipment.

All currently approved agreements will require an amendment to be executed to reflect this name change. The agreement holder will be responsible for amending their agreement. The executed amendment will be treated as a minor amendment per 22 CFR 124.1(d) and must be submitted as such.

Pending agreement applications that require amending must be brought to the attention of the assigned Agreements Officer by the agreement holder. The necessary changes will be made prior to issuance when the Agreements Officer has been notified.

DDTC Website