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Economic Sanctions
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1. Economic Sanctionsand Technology Transfers J. Daniel ChapmanSeptember 19, 2006
2.
Economic Sanctions – Regulate people
Export and – Regulate goods, Reexport Controls software and technology
3. Terminology Clearly distinguish “economic sanctions” and “export and reexport controls”
Avoid the terms:
“embargo” or “embargoed”
“trade controls”
“trade sanctions”
4. General principle U.S. economic sanctions forbid:
Directly engaging in or
Facilitating others engaging in
Prohibited dealings with sanctioned countries, governments, persons or activities
5. Facilitation
An expansive and indefinable legal term that has a meaning similar to “enable.”
Examples:
Providing I.T. support
Hosting a server that is used in a sanctioned transaction
Referring persons seeking I.T. support to others who can assist
6. Prohibited Dealings Cuba – No transactions facilitated by U.S. persons or their subsidiaries; no imports
North Korea – No imports into U.S.; no owning, leasing, operating or insuring North Korean flagged vessels
Iran & Sudan – No transactions facilitated by U.S. persons; no imports; $20 million annual cap on energy investment in Iran
Burma/Myanmar – No provision of financial services or new investment by U.S. persons (certain exceptions for subcontracting arrangements); no imports
Targeted programs – No transactions facilitated by U.S. persons with parties on the Specially Designated Nationals List or that could support terrorism or the proliferation of weapons of mass destruction
7. Interaction with export and reexport controls
A “deemed” export can become a transaction that triggers the application of U.S. economic sanctions.
A violation of export or reexport licensing requirements often is also a direct violation of U.S. economic sanctions.
8. Exceptions Information exceptions
One-way flow of information from sanctioned to non-sanctioned countries (such as financial reports)
Pre-existing information
Inventory/Distributor exception
Sales to the general inventory of non-regulated persons are permissible when
the sale to the general inventory is not pursuant to a specific sanctioned country order and
resales from this general inventory are not predominantly to a sanctioned country
9. Applying the inventory exception to singular actions
By analogy, actions are permitted that
do not have a predominant purpose of facilitating sanctioned transactions and
are not pursuant to specific sanctioned transaction order or request.
10. Hypothetical Examples
Uploading information
Access to electronic networks
Systems maintenance
11.
Questions?
12. Economic Sanctions and OFAC Import Restrictions