Category: Trade Security

In addition, OFAC also amended an existing general license to broaden its authorization with respect to the importation of certain Sudanese-origin services and to add an authorization for activities related to Sudanese persons’ travel to the United States.

There are also a series of technical changes to better reflect the formation by Southern Sudan of the independent state of the Republic of South Sudan on July 9, 2011. You can download the Federal Register notice here.

This issue dates back to the 1990s, involves China, and the Clinton Administration. Satellites are high-tech toys that are critical to U.S. national security as well as for commercial reasons, we can should sell a lot of them to countries and companies that need them. That said, because they are so cutting edge, the U.S. government needs to monitor and control who buys them. The two federal agencies responsible for monitoring this matter are the Commerce Department and the State Department.

During the Clinton Administration, an interagency review resulted in transferring the control of commercial satellite technologies in March 1996 from the State Department to the Commerce Department. Three years, and several scandals later, (a lot of it involving the transfer of sensitive U.S. technologies to the Peoples Republic of China), the Clinton Administration was forced to reserve course when the Congress required the transfer of commercial satellite technology control back to the State Department.

[Note: I’ve skipped over a lot of history. If you are new to the issue and want to learn more about it, start by reading the Report of the Select Committee on U.S. National Security and Military/Commercial Concerns with the People’s Republic of China or the “Cox Report“]. You can also Google the following terms: Hughes Loral China satellites.

What’s the issue then? State, Commerce, its all the same right? Not really. Each agency operates pursuant to unique statutes and regulations tailored to its mission. State is supposed to control things that have some form of military application, while the Commerce focuses on items that can both civilian and military application. According to some experts (usually non-lawyers), if your item, service, or technology is falls under the State Department, the controls are tougher. Take it from a practitioner, both sets of regulations are tough and the penalties serious; however, satellite controls are a special beast that require a closer review by policymakers no matter which agency ultimately oversees the control.

In a press release earlier this week, the Satellite Industry Association (SIA) touts the Berman-Manzullo stating the measure will “dramatically improve” the competitiveness of U.S. satellite industries. Given the history of this issue, this statement is not likely to win over national security hawks in the House and Senate, or even some in parts of the Obama Administration. Granted, changes are needed because the U.S. satellite industry is hurting (in fact overseas industries have sprung up claiming ITAR-free satellites and the European Space Agency has a whole division dedicated to this market of avoiding U.S. export controls); however, at its core, I do not think the proposed bill does the U.S. policy debate justice. If it is part of a larger effort at comprehensive reform, then maybe its worth exploring.

Transferring controls of some or all of this technology should not be done hastily. The Obama Administration has been working on reforming the export control system and we hear they are looking at the satellite controls, among many other things. For the Berman-Manzullo approach to work (and it needs some tweaking), the Congress and the Obama Administration should, at a minimum, begin by seriously looking at re-authorizing the Export Administration Act of 1979 in some form (for example, H.R. 2122, a bill do just that was introduced by the Chairman of the Foreign Affairs Committee, Rep. Ileana Ros-Lehtinen (R-Fla.) and could form the basis for further discussion).

You can read Safeguarding United States Satellite Leadership and Security Act of 2011 (HR 3288) here.

On November 14 the following week, the President’s Export Council Subcommittee on Export Administration (PECSEA) will meet at the Department of Commerce. The PECSEA provides advice on matters pertinent to those portions of the Export Administration Act (EAR) that deal with United States policies of encouraging trade with all countries with which the United States has diplomatic or trading relations and of controlling trade for national security and foreign policy reasons.

It is expected that the President’s export control reform initiative will be discussed at both sessions. The Obama Administration in the Fall of 2009 set in a motion a broad-based inter-agency review of U.S. export controls that built upon reforms started during the Bush Administration. The Obama Administration decided to launch an Export Control Reform Initiative that aims to update U.S. export control laws and regulations.

For more information about these two fall meetings, please follow these links: DTAG and PECSEA.

 

According to U.S. Department of Justice officials, the case “demonstrates the importance of keeping America’s sensitive military technology from falling into the wrong hands … [Mr.] Michael Todd is being held accountable for his role in a broad conspiracy to supply Iran with advanced military aircraft technology that is restricted for export from the United States,” said Michael J. Moore, U.S. Attorney for the Middle District of Georgia.

Todd was arrested in Atlanta in December 2010. He and his company, The Parts Guys, pleaded guilty to conspiracy charges earlier this year. U.S. government press statements detailing the case are available here and here.

 

 

Prior to this change, under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), these types of food exports required exporters subject to U.S. laws and regulations to apply for a specific OFAC license that was valid for one year.

In a summer edition of the Stars and Stripes newspaper, there is an article detailing recently published guidelines for U.S. troops stationed the Middle East during the Muslim holy month of Ramadan. “Troops in Mideast given guidance on Ramadan,” discuses how troops were instructed to respect local customs by, among other things, no drinking alcholic beverages as well as no chewing gum or smoking in public. When we read the new regulations, we found curious the exclusion of alcoholic beverages, cigarettes, and gum.

The new regulation definitions specify that food does not include alcoholic beverages, cigarettes, gum, or fertilizer.” Fertilizer seem logical because, in nefarious hands, many types of fertilizers can used to do bad things. But we could not find a legal or policy reason for excluding alcohol, gum, and cigarettes. We know what you are likely thinking, is this an effort by OFAC at Sharia-proofing our sanctions programs? We do not think so, but it is a curious grouping of items that we see every now and then in the trade arena.

For example, the U.S.-Singapore Free Trade Agreement that went into effect in 1992, and revised several times thereafter, at one point banned the import of chewing gum to Singapore because the country was having problems with gum chewers sticking used gum in places other than waste receptacles. This resulted in a lobbying effort by U.S. confectioners that, ultimately, allowed for the export of gum to Singapre having “therapuetic value.”

We asked around about the Iran alcohol, cigarette, and gum exclusion in the new regulations and, you guessed it, no one has any idea why it was included. We’ve just chalked it up to one of those many unknown unkowns that make up U.S. export controls and sanctions programs (and give lawyers who advise clients in this arena something more to speculate about).

You can dowload the Federal Register notice here.