A Texas federal court vacated a $2 million penalty imposed on ExxonMobil by the Treasury's Office of Foreign Assets Control for sanctions violations, in a decision issued Dec. 31. The Northern Texas U.S. District Court ruled that OFAC did not provide ExxonMobil “fair notice that their conduct was prohibited.” The decision stems from a lawsuit filed in August (see 1908280031) against OFAC, in which ExxonMobil alleged its business dealings with Rosneft, the Russian oil company owned by sanctioned oligarch Igor Sechin, did not warrant a sanctions penalty.
Ian Cohen
Ian Cohen, Deputy Managing Editor, is a reporter with Export Compliance Daily and its sister publications International Trade Today and Trade Law Daily, where he covers export controls, sanctions and international trade issues. He previously worked as a local government reporter in South Florida. Ian graduated with a journalism degree from the University of Florida in 2017 and lives in Washington, D.C. He joined the staff of Warren Communications News in 2019.
The Commerce Department is amending the Export Administration Regulations to control exports of software designed to “automate the analysis of geospatial imagery,” Commerce said in an interim final rule. The software will be controlled under the Export Control Classification Number 0Y521 series -- a temporary holding classification that lasts for one year from the day the final rule is published. Although the agency believes it is in the U.S.’s national security interest to “immediately” control this software, Commerce is seeking comments on the interim final rule. Comments are due March 6.
Multilateral Export Regimes Need Better Coordination to Implement Emerging Tech Controls, Study Says
Although multilateral export regimes share many of the same concerns over emerging technologies, coming to an agreement on the controls is proving increasingly difficult, according to a report by the Stockholm International Peace Research Institute. Regimes are facing issues reaching consensus due to the large number of “membership combinations” across multiple regimes, which have to take into account the needs of every state, and an inability to coordinate, the report said.
The U.S., China and Germany are the largest beneficiaries of the World Trade Organization, according to a report released Dec. 30 by the Bertelsmann Foundation. The three countries, also the world’s biggest exporters, saw the largest amount of income gains due to the WTO’s rules-based trading system, the report said. The report also finds a direct correlation between WTO membership and a sharp rise in exports, saying both the WTO and the General Agreement on Tariffs and Trade have led to a “significant increase” in global exports.
The Directorate of Defense Trade Controls’ interim final rule (see 1912230052) to define activities that are not exports, re-exports or retransfers will significantly reduce regulatory and compliance burdens surrounding encrypted data, a law firm and export consulting firm said. In a long-awaited move, the rule will better facilitate international data storage subject to both the International Traffic in Arms Regulations and the Export Administration Regulations.
More than half of the sanctions-related enforcement actions issued by the Treasury Department in 2019 involved supply chain violations, signaling that supply chain compliance is one of the most important factors in avoiding violations, according to a December report released by Kharon, a sanctions advisory firm. The penalties are mostly due to deficiencies in three main areas of supply chain compliance, Kharon said: companies that operated in “heightened-risk jurisdictions,” companies that operated “existing and newly acquired” foreign subsidiaries, and companies that showed deficiencies while monitoring actors in its supply chain.
A lack of export control harmonization and an uneven playing field across the European Union are increasingly hurting Europe’s semiconductor industry, said Aude Jalabert, a trade compliance manager for Infineon Technologies and a member of the European Semiconductor Industry Association. The export licensing and control regimes across EU member states are mainly marred by inconsistencies, language barriers and a lack of staffing, Jalabert said.
The European Union plans to finish rolling out its electronic licensing regime for dual-use exports by 2021, said Gabriela Stoica, a lead analyst of digital trade policy at the European Commission. The regime is being tested by four member states -- Latvia, Italy, Romania and Greece -- and the commission plans to add Belgium as a pilot tester soon, Stoica said. In the program’s next step, the commission plans to launch an e-licensing platform for steel and aluminum imports under the EU’s prior surveillance licensing regime. Stoica said those e-licenses will be “fully live with all member states” by Dec. 31.
U.S. companies and exporters have not told the Trump administration that sanctions on Venezuela are hurting their business, according to Elliott Abrams, the State Department’s special representative for Venezuela. As the U.S. continues one of its most active sanctions regimes (see 1911190028) against a country it says is marred by corruption and human rights abuses, companies are becoming more understanding of U.S. foreign policy goals, Abrams said.
The U.S. sanctions bill against Russia’s Nord Stream 2 pipeline may not have the chilling effect that lawmakers expect, trade experts said. The U.S. should introduce export controls to bolster the sanctions, the experts said, but those restrictions may be too late because the Russia-Germany pipeline is nearing completion. The bill also may disproportionately sanction German businesses involved in the project instead of the real target, they said, which is Russia.