CHAPTER XXXV U.S. EXPORT CONTROLS U.S. Government Agencies Controlling Exports Export Control Purposes Scope of Export Administration Regulations (EAR) General Prohibition Export License Requirements Commerce Control List Commerce Country Chart License Exceptions Destination Control Statement Sanctions

U.S. Government Agencies Controlling Exports Dept of Commerce, Bureau of Industry & Security (BIS): Dual-use items: Products, Software and Technology   Dept of State, Directorate of Defense Trade Controls (DDTC): Defense services and Defense articles (munitions) Dept of Justice, Drug Enforcement Administration (DEA): Controlled substances

U.S. Government Agencies Controlling Exports Nuclear Regulatory Commission, Office of International Programs (OIP): Nuclear equipment and materials Dept of Energy, Office of Fuels Programs (OFP): Natural gas and electric power   Dept of Energy, National Nuclear Security Administration (NNSA): Nuclear technology & technical data for nuclear weapon & special nuclear materials

U.S. Government Agencies Controlling Exports Dept of Interior, Fish and Wildlife Service (FWS): Endangered and threatened fish, wildlife, and species Dept of Treasury, Office of Foreign Assets Control (OFAC): Assets of, and import and export with embargoed countries. Many of regulations of OFAC overlap with BIS's. Dept of Agriculture, Agricultural Marketing Service: Tobacco seed and live tobacco plant, fresh fruits and vegetables, and all meat products

U.S. Government Agencies Controlling Exports Environmental Protection Agency, Office of Solid Waste & Emergency Response (OSWER): Hazardous toxic waste Dept of Commerce, Patent and Trademark Office, Licensing & Review: Patent filing data sent abroad This chapter covers only export controls administered by the Bureau of Industry and Security (BIS) of U.S. Dept of Commerce under Export Administration Regulation (EAR)

Export Control Purposes Three general guidelines National Security Exports which would make a significant contribution to the military potential to an other country or countries detrimental to the national security of the U.S. Foreign Policy To further significantly the foreign policy of the U.S. or To fulfill its declared int’l obligations Short Supply To protect domestic economy for excessive drain of scarce materials To reduce serious inflationary impact of foreign demand

Reasons for Export Controls Anti-Terrorism Controls (AT) Chemical or Biological Weapons Controls (CB) Crime Control Controls (CC) Chemical Weapons Convention Controls (CW) Encryption Items Controls (EI) Firearms Convention Controls (FC) Missile Technology Controls (MT)

Reasons for Export Controls Nuclear Non-Proliferation Controls (NP) National Security Controls (NS) Regional Stability Controls (RS) Short Supply Controls (SS) Computers Controls (XP) Significant Items Controls (SI)

Scope of Export Administration Regulations (EAR) Items subject to the EAR All items in the United States including foreign trade zone & moving in transit All U.S.-origin items wherever located throughout the world Foreign-made commodities that incorporate controlled U.S. origin commodities, software or technology, subject to the de minimis levels

Scope of Export Administration Regulations (EAR) Items subject to the EAR (continued) 4) Certain Foreign-made direct products of U.S. origin software or technology. Immediate products produced by U.S. software or technology   Activities of U.S. persons related to the proliferation of nuclear explosive devices, chemical or biological weapons, and missile technology 6) Activities of U.S. or foreign persons prohibited by an order under the EAR including a Denial Order

Scope of Export Administration Regulations (EAR) Items not subject to the EAR Publicly available software and technology Books and publications of a non-technical, artistic, or informational nature Items subject to exclusive jurisdiction of another U.S. agency

General Prohibitions May not engage in export, reexport or activity which falls under one of general prohibitions without a license or license exception.   Prohibition 1: Exports and reexports of controlled items to listed countries Prohibition 2: Reexports from abroad of foreign-made items incorporating more than a de minimis amount of controlled U.S. parts and components

General Prohibitions Prohibition 3: Reexports from abroad of foreign-produced direct items of U.S. software and technology Prohibition 4: Engaging in actions prohibited by a denial order Prohibition 5: Exports and reexports to prohibited end-uses or end-users Prohibition 6: Exports and reexports to embargoed destinations  

General Prohibitions Prohibition 7: Support of proliferation activities Prohibition 8: In-transit shipments and items to be unladen from vessels or aircraft Prohibition 9: Violation of any order, terms, and conditions Prohibition 10: Proceeding with transactions with knowledge that a violation has occurred or is about to occur.

Export License Requirements An export license is required if An item is listed on Commerce Control List (CCL) and Commerce Country Chart states that an export license is required for export to that country

Export License Requirements (1) Commerce Control List   Items (Commodities, Software, Technology) subject to BIS's export license. 10 categories: 0 to 9 5 groups: A-E Individual item identified by Export Control Classification Number (ECCN), 5 digits 3A001: Electronic Equipment National Security EAR 99: Subject to the EAR but not listed in the CCL

Export License Requirements (2) Commerce Country Chart   Reason for export control to a particular destination If an X appears in the cell, license is required to that destination unless license exception is provided. When export under license exception , mark "NLR" on the Electronic Export Information (EEI) (formerly Shipper’s Export Declaration, SED) If an X does not appear, no license is required unless General Prohibitions 4 to 10 apply

Export License Requirements (3) Denied Persons List A list of firms and individuals who have been denied export and reexport privileges Any dealings with a party on this list are prohibited. (4) Entity List A listing of foreign end users involved in proliferation activities of weapons of mass destruction or missiles Based on Enhanced Proliferation Control Initiative (EPCI) General Prohibition 5 (prohibited end-users)

Export License Requirements (5) Bureau of Industry and Security (BIS) Forms BIS 752P Statement of Consignee in support of Special Comprehensive License BIS 645P International Import Certificate BIS 647P Delivery Verification Certificate BIS 648P Notification of Delivery Verification Requirement BIS 711     Statement by Ultimate Consignee and Purchaser

License Exceptions Authorization to export or reexport otherwise controlled items without a license under the stated conditions License Exceptions for Limited Value Shipments (LVS) License Exceptions for Group B Country Shipment (GBS) License Exceptions for Civil End-users (CIV) License Exceptions for Temporary Imports, Exports, Reexports (TMP)

License Exceptions License Exceptions for Service and Replacement of Parts and Equipment (RPL) License Exceptions for Governments, Int’l Organizations, and Int’l Inspections (GOV) License Exceptions for Gift Parcels and Humanitarian Donations (GFT) License Exceptions for Baggage (BAG)

License Exceptions Country Groups Group A: Regime members Wassenaar Arrangement (41 members) Nuclear Suppliers Group (40 members) Australia Group (Chemical & Biological Weapons, 34 members) Missile Technology Control Regime (33 members) Group B: Less Restricted countries Group C: Reserved

License Exceptions Country Groups Group D: Countries of Concern Group E: Terrorist Supporting Countries Cuba Iran North Korea Sudan Syria

Destination Control Statement Advises recipients of U.S.-origin commodities of their legal responsibilities and restrictions under U.S. export and reexport regulations “These commodities, technology or software were exported from the United States in accordance with the Export Administration Regulations. Diversion contrary to U. S. law prohibited.” To be placed on Bill of Lading, Air Waybill, Commercial Invoice, when export is made under export license or license exception

Sanctions Administrative Penalties (a) Civil Penalty $11,000 for each violation $120,000 for a violation of national security control   (b) Denial of Export Privileges An order issued to prohibit a person from participating in any way in any transaction subject to the Export Administration Regulations (EAR)

Sanctions (1) Administrative Penalties (continued) (c) Exclusion from Practice Attorney, Accountant, Consultant, Freight Forwarder denied practice for license application or other matters before Bureau of Industry and Security (BIS) of USDC

Sanctions (2) Criminal Penalties (a) General Violations: Five(5) times the value of the export or $50,000, whichever is greater for each violation for non-individual violators Five(5) times the value of the export or $50,000, whichever is greater or Five (5) years imprisonment for each violation or Both for individual violators

Sanctions (2) Criminal Penalties (continued) (b) Willful Violations Five (5) times the value of the export or $1,000,000 whichever is greater for non-individual violators Five (5) times the value of the export or $250,000, whichever is greater or 10 years imprisonment or Both for individual violators

Sanctions (3) Violations of False Statement Act License application   License application Boycott report Electronic Export Information, EEI ( formerly Shipper's Export Declaration, SED) $10,000 or Five (5) years imprisonment or Both

Violators In March, 2007, ITT Corp. agreed to pay a penalty of up to $100 million for illegally exporting night-vision goggle component parts to China, Singapore, and Britain Payment of a $50 million deferred prosecution penalty for 5 yrs will be waived if ITT spends $50 million on R & D into building better night goggles. In March 2008, C. Mak, a Chinese American engineer, was sentenced to 24½ years in federal prison to conspiring to export to China defense sensitive technology that makes it easier to detect U.S. submarines In September 2007, Chiquita Brands International Inc. agreed to pay a $25-milliion fine from over protection payments it made to a Colombian paramilitary group. Chiquita paid $1.7 million from 1997 to 2004 because they threatened to harm its employees.

Violators In September 2008, a Chinese woman, Q. Li, was sentenced to a year and a day in federal prison with a fine of $7,500 for attempting to smuggle military hardware to China. . In December 2008, three men, D. Dang, L. Huynh, and G. Bui were indicted of illegally exporting 55 pairs of night-vision goggles to Vietnam. In March 2009, a 31-year-old Iranian woman, S. Gholikhan, was sentenced to more than five years in prison for her role in a scheme to smuggle military night-vision goggles to Iran. In July 2009, J. Roth of Tennessee, was sentenced to 48 months in prison for conspiring to illegally export, and actually exporting, technical information relating to a U.S. Air Force research to China. In February 2010, Balli Aviation Ltd. agreed to pay a $2 million criminal fine on top of $15 million civil penalty for illegally exporting three Boeing 747 aircraft from the United States to Iran.

Violators In August 2010, Y. Chen, a Taiwanese, was sentenced to 3.5 years in prison on charges of illegally exporting dual-use goods for Iran’s missile program from the U.S. by way of Taiwan and Hong Kong. In August 2010, Barclays Bank PLC agreed to pay a fine of $298 million over financial transactions with banks in Cuba, Iran, Libya, Sudan, and Burma. In September 2010, C. Kuok of Macao, China, was sentenced in San Diego federal court to 8 years in prison for trying to smuggle to China communication, encryption, and GPS equipment that are used by the U.S. military. In October 2010, J. Yun, a Korean American, was sentenced in a Miami federal court to 57 months in prison for attempting to smuggle Russian Rocket hardware and technology to South Korea. In December 2010, PPG Industries, Inc. and its wholly-owned Shanghai subsidiary agreed to pay a fine of $3.75 millions for illegally exporting protective coatings for use by the Pakistan Atomic Energy Commission in the construction of a nuclear power plant.