Trade Law

Washington, D.C. partner Kevin Wolf, London partner Jasper Helder and Emily Kilcrease with the Center for New American Security submitted a detailed comment to U.S. and EU export control authorities to help guide and inform efforts to rationalize U.S. and EU export controls.  It can also be a useful resource for anyone interested in the topic and wanting to understand the history and context to current export control policy issues. They note that the US-EU Joint Statement on the role and purpose of export controls “is far more significant than generally recognized because it is the first time the EU (represented by the EC) or any other US ally has stated so explicitly and publicly since the end of the Cold War an agreement with the US that export controls should be used to achieve country-specific and other policy objectives not directly related to weapons of mass destruction or conventional military items.”

On January 13, 2017, President Obama issued Executive Order 13761 to be effective on July 12, 2017, which would revoke prior executive orders underlying the Sudanese Sanctions Regulations and effectively terminate the Sudan sanctions program, provided that the incoming Secretary of State (Rex Tillerson) issues a finding regarding Sudan’s cooperation in five key areas of engagement: countering terrorist groups, ending the threat of the Lord’s Resistance Army, ending the government’s offensive internal military operations, ending Sudan’s destabilizing role in South Sudan, and improving humanitarian access. See our prior alert on that executive order for more information.

On February 2, 2017, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued Cyber-related General License (GL) 1, a general license that authorizes certain transactions with Russia’s Federal Security Service (Federalnaya Sluzhba Bezopasnosti or FSB).  GL 1 authorizes U.S. persons (i.e., individuals and companies) to request, receive, use, pay for or deal in licenses, permits, certifications, or notifications issued or registered by the FSB for information technology (IT) products in Russia, provided that (i) the relevant IT goods or technology are subject to the U.S. Export Administration Regulations (EAR) and are licensed or otherwise authorized by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS); and (ii) payment of fees to the FSB for such licenses and other authorization or notification does not exceed $5,000 in any calendar year. GL 1 also authorizes transactions or activities that are necessary and ordinary incident to complying with law enforcement or administrative actions or investigations involving the FSB or rules and regulations administered by the FSB.

On January 13, 2017, the departments of State and Commerce published notices of inquiry (NOI) requesting comments on additional proposals for U.S. Munitions List (USML) Category XII and related controls for items subject to the Export Administration Regulations (EAR).¹ The requests are particularly relevant for companies that deal with sensors, lasers, infrared detection items and guidance equipment. The agencies published these NOIs within two weeks of corresponding Export Control Reform (ECR) changes that went into effect on December 31, 2016, for these items.² Public comments are due by March 14, 2017.

(Washington, D.C.) – Kevin J. Wolf, a former senior U.S. Department of Commerce official who served for the past seven years as Assistant Secretary of Commerce for Export Administration, has joined Akin Gump as a partner in its international trade practice in Washington, D.C., the firm announced today. He is accompanied by Steve Emme, who served for five years as Senior Advisor to Assistant Secretary Wolf.

On January 19, 2017, the Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule increasing compliance requirements associated with the export and reexport of items controlled under the EAR to and from Hong Kong. Specifically, the new rule requires that exporters and reexporters obtain from their customers or consignees, prior to shipment, a valid import license or written authorization from the Hong Kong government that no such license is required. Similarly, the rule also prohibits the reexport of EAR-controlled items from Hong Kong, unless the reexporter obtains an export license or other written authorization from the Hong Kong government.

On January 19, 2017, the Department of Commerce’s Bureau of Industry and Security (BIS) published new regulations that establish a licensing policy of general approval for exports or reexports to, or transfers within, India for most military, satellite and other items subject to the Export Administration Regulations (EAR) that do not involve weapons of mass destruction. Specifically, the items at issue in the new policy are those that are controlled for “National Security” or “Regional Stability” reasons only, which include most “600 series” military items and most satellite items. Additionally, BIS has significantly expanded the scope of potential license-free exports, reexports and transfers of items to India by allowing military end uses for the first time under the Validated End-User (VEU) program, in addition to civil end uses. This rulemaking follows the Obama administration’s recognition of India as a “Major Defense Partner” on June 7, 2016, and implements various commitments made by the United States related to that unique partnership status. It is the first major change to the India VEU program since July 2009, and the broader policy changes reflect the ongoing expansion of U.S.-India cooperation in civil space, defense and other high-technology sectors since 2010. Importantly, today’s changes create opportunities for more production of military, satellite and controlled dual-use items in India involving U.S.-origin items with fewer regulatory burdens and delays.     

Overview of Actions Taken by the United States

On December 29, 2016, President Obama announced that he was sanctioning nine individuals and entities: the Main Intelligence Directorate (aka Glavnoe Razvedyvatel’noe Upravlenie) (GRU) and the Federal Security Service (aka Federalnaya Sluzhba Bezopasnosti) (FSB), two Russian intelligence services; four individual officers of the GRU; and three companies that were stated to have provided material support to the GRU’s cyber operations. In addition, two Russian individuals were sanctioned for using cyber-enabled means to cause misappropriation of funds and personal identifying information. These actions mark the first expansion of the Specially Designated Nationals (SDN) List to include entities and individuals under the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) cybersecurity program since it was established on April 1, 2015. The 2015 client alert can be found here.