Global Knowledge®

The Bureau of Industry and Security (BIS) recently published proposed changes to US export law in the Federal Register and asked for public comment. The changes primarily deal with the fact that the US has two lists for items that require export control and licensing:  the US Munitions List (USML) administered by the State Department, and the Commerce Control List (CCL) maintained by the Commerce Department.
 
The current export control statute, written in 1979, reflects its Cold War heritage and hasn’t adapted to the rapid pace of technological change since then. Many items on the USML that were once considered high risk to national security are now widely available or low risk.
 
A key aspect of the proposed reform legislation would remove those items from the USML and move them to the CCL where exemptions to licensing are more flexible. This would allow the government to focus its limited resources on controlling transactions that need the highest level of scrutiny.
 
The details of the reform are available here. Of course, Management Dynamics will continue to monitor the changes proposed to the export control rules and numbering system. Once enacted, our classification and license determination products will accurately reflect the changes. For now, we support the efforts of our legislators to update and streamline the export control lists so they are more in line with today’s technologies.
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China’s Ministry of Commerce has announced that it has decided to extend antidumping and antisubsidy investigations into US-made off-road vehicles and sedans with an engine displacement of 2.0 liters and above.  The extension is for six months, until May 6, 2011.  China launched the probes on November 6, 2009, after the China Association of Automobile Manufacturers complained that US car makers had unfairly benefited from 31 government subsidy programs.

The USDA’s Economic Research Service has issued a report on Karnal bunt (KB), a wheat disease of limited distribution in the United States, as affected areas are quarantined to limit spread of the disease.  Currently, the KB regulatory program allows the USDA to issue phytosanitary export certificates stating that a wheat shipment is from an area where KB is not known to occur.  Some in the wheat marketing chain, particularly elevator operators, find the regulatory program burdensome and advocate ending it.  A model developed by the ERS was used to analyze the market effects of ending the certification.  An average annual loss of 15.1% in export markets for US wheat producers would be only partially offset by increased use of lower priced wheat for domestic livestock feed.

With new Iran sanctions taking effect September 29, the Treasury Department’s Office of Foreign Assets Control (OFAC) has published a document providing guidance on the import prohibitions concerning Iranian-origin goods and services, which are a result of the Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010.  As described in 31 CFR Part 560 of the bill, no one will be allowed to import commercial goods originating from Iran.  As a result, OFAC cannot authorize general or specific licenses for the importation of such goods on or after September 29, 2010.  According to World Trade\INTERACTIVE, “the general license in section 560.534 of the Iran Transaction Regulations will therefore be eliminated by Sept. 29 and any such goods for commercial importation into the U.S. must be entered for consumption before that date.”

The Treasury Department has announced a set of designations targeting the government of Iran for supporting terrorism and terrorist organizations, including Hizballah, Hamas, Palestinian Islamic Jihad (PIJ), the Popular Front for the Liberation of Palestine-General Command (PFLP-GC) and the Taliban, pursuant to Executive Order 13224.  All transactions involving the designees and any U.S. person are prohibited, and any assets the designees may have under U.S. jurisdiction are frozen.  In a recent press release, Treasury also identified 21 entities in Iran’s banking, insurance and investment, mining, and engineering industries that were determined to be owned or controlled by the government of Iran, with which transactions are prohibited under the Iranian Transactions Regulations.

CBP and the Treasury Department have carefully reviewed the comments submitted in response to the rules of origin proposal.  In particular, the agencies have heard concerns expressed about the impact that an extension of the rules of origin to non-NAFTA countries may have on the trade community.  These matters are still under consideration within the agencies as part of the official rule-making process; however, CBP expects to soon be publishing a notice on this matter in the Federal Register.  (In July 2008, CBP issued a proposed rule to use uniform tariff shift and other rules for CBP determinations of the country of origin of imported merchandise, etc.  CBP subsequently extended the comment period and reopened the comment period on the proposed rule.)

The Treasury Department states that the Office of Foreign Assets Control announced an $860,000 settlement with Agar Corporation, Inc. (ACI), an oil field equipment company.  ACI participated in the unlicensed export of oil and gas production equipment for use in Sudan, which is in violation of the Sudanese Sanctions Regulations.

The National Nuclear Security Administration (NNSA) has announced that the Republic of Malta will join the U.S. Megaports Initiative, a cooperative effort to detect, deter, and interdict illicit maritime smuggling of nuclear and other radioactive material.  As part of the agreement, the NNSA will work with the Maltese Customs Administration and other government agencies in Malta to install radiation detection equipment and associated infrastructure at the port of Marsaxlokk.  This cooperative framework will also train Maltese officials on the use of the equipment and provide for maintenance of the equipment for a specified period.

According to Sandler, Travis & Rosenberg’s WorldTrade\Interactive newsletter, we can all breath a sigh of relief.  The US and European Union have signed an agreement that will hopefully lead to them settling a dispute over the EU’s banana imports.  Apparently previous EU regulations led to discrimination against certain banana distributors.  The EU has agreed to eliminate quotas, tariff rate quotas, and import licensing requirements for banana imports.  I had no idea the banana trade was so intense!  It turns out that the US isn’t the only country that has a problem with the EU’s banana trade regulations – Latin American countries aren’t a fan either.  Read the article to learn more.  (If you don’t receive this newsletter, you should sign up.  It’s a great resource!)

The Justice Department reports that Yi-Lan Chen (aka Kevin Chen, age 40), a Taiwan passport holder, and his Taiwan corporation, Landstar Tech Company Limited, plead guilty to charges of conspiring with individuals in the US, Iran, Hong Kong, and elsewhere to illegally export US dual-use circular hermetic connectors.  They also exported glass to metal seals (missile components) to Iran, via Guam and Taiwan.