France To Sidestep Sanctions by Setting up New Trade Financing Vehicles

Ever since France, the U.S., and other world powers agreed in 2015 to lift certain economic sanctions in exchange for controls on Iran’s nuclear program, European countries have been searching for a way to step up trade with Iran. France plans to structure financing in such a way as to increase trade with Iran while avoiding the long reach of U.S. sanctions. By offering euro-denominated credits to buyers in Iran, the French will be able to increase sales of its goods.

According to Nicolas Dufoursq, the head of France’s state-owned investment bank, Bpifrance, a lot of preparation has gone into this plan to provide new loans. “This is a completely separate flow (of money),” he explained. “There is no (U.S) dollar in this scheme.” He added that there is as much as 1.5 billion euros in potential contracts from French exporters alone.

The French have maintained trade ties with Iran for decades and still have large factories there, including a Renault plant. Other European countries such as Belgium, Italy, Germany, and Austria are working on their own financial mechanisms to enable them to bolster trade while not running afoul of U.S. sanctions.

As recently as October of 2017, Trump criticized such efforts to sidestep nuclear agreements, but has since told French President Emmanuel Macron and German Chancellor Angela Merkel they could "keep making money" in Iran.

ZTE Agrees to $892 Million Fine and Plead Guilty for Violating US Sanctions

ZTE, a Chinese telecommunications giant, reached a settlement with the U.S. Justice Department, which comes at the end of a 5-year investigation into a series of shipments ZTE has made to Iran in violation of US sanctions. Per the settlement, ZTE will plead guilty and pay the DOJ $430 million, with a fine of $287 million and a criminal forfeiture of $143.5 million. The total dollar figure may ultimately rise to as much as 1.19 billion depending upon whether or not the firm violates the terms of the settlement agreement with BIS (US Department of Commerce’s Bureau of Industry and Security).

According to the Justice Department, ZTE obtained components manufactured in the U.S. that are on the Department of Commerce’s Commerce Control List, incorporated those items into its own equipment, and subsequently shipped the finished products to customers in Iran. In addition, the Justice Department charges that the company continued to ship these items while the investigation was ongoing. Apparently the items were used to fulfill contract projects ZTE had in Iran to install cellular and landline network infrastructure. (The Commerce Department also reports that ZTE shipped controlled items to North Korea as well.)

U.S. Attorney John R. Parker for the Northern District of Texas stated that, “ZTE Corporation then went to great lengths to devise elaborate, corporate-wide schemes to hide its illegal conduct, including lying to its own lawyers.” As much as $32 million dollar’s worth of equipment was shipped to Iran between January 2010 and January 2016; the company was also able to obtain hundreds of millions of dollars in contracts with Iran, the Commerce Department said in a recent press release.

The plea agreement still requires court approval, but if approved, it would subject ZTE to a probationary period of three years during which the firm would be under the eye of an independent compliance monitor as well as a seven-year suspended denial of export privileges, which could be activated if there are further violations. The Justice Department reported that the criminal fine in this case is the largest ever levied in an IEEPA (International Emergency Economic Powers Act) prosecution.

CBP to Make C-TPAT Available to Exporters May 17, 2015

Customs and Border Protection (CBP) will make the Customs-Trade Partnership Against Terrorism (C-TPAT) available to exporters starting May 17, 2015. According to CBP, potential benefits of being a C-TPAT-certified exporter will include prioritized export shipments, global security partnerships, heightened facilitation from mutually-recognized customs partners, access to C-TPAT sponsored security seminars, and reduced examinations of shipments.

According to CBP, “any person or company who, as the principal party in interest in the export transaction, has the power and responsibility for determining and controlling the sending of the items out of the United States” and satisfies the additional eligibility requirements can now apply to become C-TPAT certified as an “export-only” organization. Among the list of eligibility requirements are the following chief components: the exporter must be actively exporting and maintain an office based in the United States, maintain a documented export security program meeting all the C-TAPT criteria, and have a good compliance record in accordance with requirements.

The new availability to export-only companies follows one day after CBP’s Phase II deployment for the C-TPAT portal. The deployment will restructure the security profile function into individual line items, streamline applications to U.S. partnership programs, add functionality, and meet DHS mandated requirements. The new design will give users greater flexibility and security in maintaining and updating their accounts.

Aaron Ambrite, Extern, Global Trade Expertise 

Intel Subsidiary Agrees to $750,000 Penalty for Unauthorized Encryption Exports

On October 8, 2014, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced that Wind River Systems of Alameda, Calif., a wholly-owned subsidiary of Intel Corporation, has agreed to a $750,000 civil penalty to settle charges that it sold encryption software products to foreign government customers and to organizations identified on the BIS Entity List without the required Department of Commerce licenses.  

In April 2012, Wind River Systems voluntarily disclosed to BIS that between 2008 and 2011 the company made 55 exports of operating software valued at $2.9 million to governments and various end users in China, Hong Kong, Russia, Israel, South Africa, and South Korea. The operating software is controlled under Export Administration Regulations for national security reasons, and some of the export recipients in China are on the BIS Entity List. 

“I approved penalties in this case because the violations were ongoing over a period of several years,” said Assistant Secretary of Commerce for Enforcement, David W. Mills. “Because the violations were voluntarily disclosed, the company received significant mitigation. This penalty should serve as a reminder to companies of their responsibility to know their customers and, when using license exceptions, to ensure their customers are eligible recipients. 

BIS controls exports and reexports of commodities, technology, and software to support national security and foreign policy, including nuclear, chemical and biological weapons, and missile non-proliferation, human rights, regional stability, and curbing terrorism. Criminal penalties and administrative sanctions can be imposed for violations of the Export Administration Regulations. For more information, please visit www.bis.doc.gov.

BIS Fines CA Company $115,000 for Deemed Export Violation

On February 24, 2014, the U.S. Department of Commerce's Bureau of Industry and Security's (BIS) Office of Export Enforcement (OEE) announced that it has reached a $115,000 civil settlement with Intevac Inc., of Santa Clara, CA. BIS fined the company for five violations of the Export Administration Regulations (EAR), including the unauthorized release of export controlled manufacturing technology to a Russian national at its U.S. facility. 

"Deemed export compliance is a top priority for the Bureau of Industry and Security," said David W. Mills, Assistant Secretary of Commerce for Export Enforcement. "Today’s settlement highlights the need for companies to be vigilant to prevent the unauthorized release of U.S. technology and data."

BIS further stated that:

Intevac voluntarily disclosed the unauthorized release of drawings and blueprints for parts and identification numbers for parts to the Russian national in question, who was employed as an engineer at the company’s Santa Clara headquarters. Under the EAR, such information constitutes technology that is controlled for national security reasons. Intevac applied for a deemed export license after discovering the initial releases but failed to prevent additional releases of technology while the license application was pending. BIS charged Intevac with knowledge of these additional releases and considered the company’s conduct to be an aggravating factor in the penalty assessment. The company was also charged with one violation related to the unauthorized transmission of technology to its subsidiary in China.

 

State/DDTC Posts Beta Version of "Part 130 Decision Tool"

The U.S. State Department's Directorate of Defense Trade Controls (DDTC) posts a beta version of its "Part 130 Decision Tree" here. The beta version is available for evaluation until COB on December 2, 2013. DDTC requests that all questions and comments be forwarded to the DDTC Response Team at DDTCResponseTeam@state.gov  (subject line:  DDTC Part 130 Decision Tool Feedback) or at  (202) 663-1282.

President Obama Issues Presidential Determination to Facilitate Satellite Reclassification

On October 25, 2013, President Obama signed a Presidential Determination delegating three functions pertaining to export controls for satellites and related items to members of his cabinet. These activities are required steps for transitioning certain satellites and related items from the U.S. Munitions List (USML) to the Commerce Control List (CCL) under the terms of the National Defense Authorization Act of 2013. They include the submission to Congress of:

  • A one-time determination to the Congress from the Secretary of State that the removal of satellites and related items from the USML is in the national security interests of the country,
  • A one-time report to Congress from the Secretary of State analyzing the final regulations that will move certain satellites and related items from the USML to the CCL, and
  • An annual report to Congress from the Secretary of Commerce summarizing all export licenses and other export authorizations for satellites and related items subject to the Export Administration Regulations every year until 2020.

These delegations will allow the Administration to meet statutory requirements and publish implementing regulations that will modernize the nation’s satellite export controls as part of the President’s Export Control Reform Initiative.

 

Census Posts Free Webinar Series

Yesterday, Census held its last webinar in its "Go Global" free webinar series. The 11 presentation series is available to view online. Census states that: 

This in-depth webinar series provides the government resources to help you become a successful exporter from finding compatible markets for your products to financing your export program to understanding export regulations. Each of the 11 webinars will provide useful information that can increase your knowledge about international trade and help you "Go Global."

The Go Global webinar series includes the following topics: 

    • Where to Get Started
    • Preparing Your Business to Export
    • Your Market and Trade Research
    • Finding Buyers and Making Contacts
    • Trade Financing
    • Documentation and Shipping
    • Understanding Export Regulations
    • Avoiding and Resolving Problems

     

    DDTC Updates DS-2032 Statement of Registration Form

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     Effective October 25, 2013, a new version of the DS-2032 Statement of Registration  form goes into effect. The U.S. Department of State Directorate of Defense Trade Controls (DDTC) will not accept older versions of the form if submitted after the effective date. DDTC provides on its website that DS-2032  may be submitted either electronically (via EFS), by registered mail, or express mail until December 31, 2013; effective January 1, 2014 only electronic submissions will be permitted.

    The new version of the form includes several modifications, such as the ability for U.S. persons to consolidate manufacturer/exporter/broker registrations; updates to the International Traffic in Arms Regulations (ITAR) U.S. Munitions List (USML) categories; disclosure of intermediate through ultimate parents; a certification regarding debarred or subsequently reinstated parties; a certification on violations involving any U.S. criminal statutes; as well as clarification on foreign ownership.