CHAPTER XXXV U.S. EXPORT CONTROLS

1. 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

2. 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

3. 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

4. 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

5. 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)

6. 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

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

8. 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)

9. Scope of Export Administration Regulations (EAR) • Items subject to the EAR • All items in the United States • All U.S.-origin items wherever located throughout the world • Foreign produced direct products of U.S.-origin software and technology

10. Scope of Export Administration Regulations (EAR) • Items subject to the EAR (continued) 4) U.S. -origin parts, components, materials incorporated in foreign made commodities • If more than 25% for not embargoed destination • If more than 10% for embargoed destination. • Release of technology to a foreign national in the U.S. • U.S. person activities contributing to the proliferation of weapons of mass destruction

11. 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

12. 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

13. 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

14. 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.

15. 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

16. 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

18. 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

20. 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)

21. 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 711Statement by Ultimate Consignee and Purchaser

22. 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)

23. 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)

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

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

26. 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

27. 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)

28. 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

29. 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

30. 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

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

32. 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.

33. 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.

34. 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.