Every Monday we post the highlights out of last week’s FCC Export/Import Daily Update (“The Daily Bugle”). Send out every business day to approximately 8,500 readers of changes to defense and high-tech trade laws and regulations, The Daily Bugle is a free daily newsletter from Full Circle Compliance, edited by James E. Bartlett III, Salvatore Di Misa, and Elina Tsapouri.
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Last week’s highlights of The Daily Bugle included in this edition are:
- DHS/ICE: “US Files Complaint to Forfeit Iranian Missiles and Sells Previously Transferred Iranian Petroleum”; Monday, 2 Nov 2020; Item #5
- Federal Court Denies Exporter’s Petition for Preliminary Injunction of DDTC for de facto Debarment; Monday, 2 Nov 2020; Item #6
- Justice: “Chinese National Pleads Guilty To Attempting To Illegally Export Maritime Raiding Craft And Engines To China”; Tuesday, 3 Nov 2020; Item #4
- EU Commission Publishes Proposal Granting a Union General Export Authorisation for Certain Dual-Use Items for UK and Northern Ireland; Thursday, 5 Nov 2020; Item #8
- EU Commission: “Civil Society Dialogue with Rupert Schlegelmilch on EU-US Tade Relations after the US Elections”; Friday, 11 Nov 2020; Item #5
DHS/ICE: “US Files Complaint to Forfeit Iranian Missiles and Sells Previously Transferred Iranian Petroleum”
(Source: DHS/ICE, 30 Oct 2020) [Excerpts]
U.S. Navy Central Command (NAVCENT) seized the weapons from two flagless vessels in the Arabian Sea on Nov. 25, 2019 and Feb. 9, 2020, respectively. The weapons included 171 guided anti-tank missiles, eight surface-to-air missiles, land attack cruise missile components, anti-ship cruise missile components, thermal weapons optics, and other components for missiles and unmanned aerial vehicles. …
Federal Court Denies Exporter’s Petition for Preliminary Injunction of DDTC for de facto Debarment
(Source: US District Court , D. Nevada. 23 Dec 2019; Slip Copy 2019 WL 10960605)
Case: ROBERT D. THORNE, JR., et al., v. U.S. DEPARTMENT OF STATE, et al.
Case No.: 2:19-CV-1982 JCM (EJY), Filed 12/23/2019
Court: USDC, D. Nevada. 23 Dec 2019; Slip Copy 2019 WL 10960605
Judge: James C. Mahan
The instant action arises from the denial of Thorne’s licenses for the permanent export of firearms and ammunition to the entity plaintiffs. (ECF No. 2 at 3). Plaintiffs characterize the government’s denial and subsequent conduct-including classifying one of the entity plaintiffs as an “unreliable recipient” of US-origin defense articles-as a “de facto debarment” of the entity plaintiffs and Denysschen. …
Thorne sold firearms and ammunition to the entity plaintiffs, which are various South African businesses, between 2014 and 2017. Id. at 3. In order to do so, he would apply to the DDTC for a license as required by the Arms Export Control Act (“AECA”) and the International Traffic in Arms Regulations (“ITAR”). Id. During that time, the DDTC routinely approved Thorne’s licenses. Id. However, in 2018, the government reviewed several of Thorne’s applications and “identified … information suggesting that there has been at least one instance in which arms from the [entity plaintiffs] have been diverted outside South Africa to an unauthorized end user.” (ECF No. 20 at 5). Accordingly, the DDTC determined that at least one of the entity defendants is “an unreliable recipient of U.S.-origin defense articles, defense services and technical data” and began denying Thorne’s license applications. (ECF No. 2 at 4). The government “concluded, as to each export application, that denial of the applications would further world peace, the national security or foreign policy of the United States, or was otherwise advisable.” (ECF No. 20 at 5).
Thorne sought clarification from the DDTC regarding the basis of its determination and asked “whether it would help with export approval ‘to resubmit the [South African export] permits.’ “1 (ECF Nos. 3 at 4-5; 20 at 5-6). The government informed Thorne that “U.S. persons are accorded an opportunity to present additional information requesting reconsideration of an adverse decision,” but that “new permits would not overcome the presumption of denial for these transactions.” (ECF No. 2 at 4-5).
Thorne took the government’s response to mean that there was an “across-the-board ‘presumption of denial’ for all exports to the [entity defendants].” Id. at 8. The government represents that “Director Hamilton’s email intended to state merely that, in any reconsideration proceeding, [p]laintiffs would need to overcome the reasons for the original denial.” (ECF No. 20 at 6). Thereafter, all plaintiffs began petitioning the government in order to “clear their names.” (ECF No. 2 at 5).
*2 Thorne believes he was denied his opportunity to appeal the government’s decision and subsequently filed the instant action.
. . . .
*6 Thorne’s license applications were denied, Thorne sought clarification regarding the basis of its determination, and the government expressly informed him that “U.S. persons are accorded an opportunity to present additional information requesting reconsideration of an adverse decision.” (ECF No. 2 at 4-5). The government also told him that resubmitting export permits from the entity plaintiffs would not change the determination. Id. It was the latter clarification that Thorne took to mean that there was an “across-the-board ‘presumption of denial’ for all exports to the [entity defendants].” Id. at 8.
However, Director Hamilton expressly states that the government “has not imposed any ineligibility or debarment, de facto or otherwise,” on any of the plaintiffs. (ECF No. 20-1 at 23). Director Hamilton clarified that none of the plaintiffs are statutorily or administratively debarred. Id. at 23-24. Instead, Director Hamilton noted that the government will consider all future export applications on a case-by-case basis. Id. at 24. ….
As discussed above, the court cannot second-guess the government’s determination regarding the reliability of the entity defendants. The court similarly cannot second-guess the government’s decision to deny Thorne’s applications. The government made its determination after conducting a case-by-case review and used its discretion to make a foreign policy judgment call. On the other hand, none of the plaintiffs have a vested property right in the license or ability to export/import firearms and ammunition. The denial of a permit or license is one of the hazards of importing and exporting arms and ammunition. To the extent Thorne asserts due process claims on behalf of the other plaintiffs or asserts an APA claim, Thorne has not submitted any evidence or even alleged that he has reapplied for a license. But the government has indicated that such an appeal was available to him. The government further indicated that Thorne is free to apply for another license, and that application will be considered on a case-by-case basis.
* HOLDING: the court finds that none of the plaintiffs have a likelihood of success on the merits of their due process or APA claims to justify injunctive relief.
Accordingly, IT IS HEREBY ORDERED, ADJUDGED, and DECREED that plaintiffs’ motion for preliminary injunction (ECF No. 2) be, and the same hereby is, DENIED.
Justice: “Chinese National Pleads Guilty To Attempting To Illegally Export Maritime Raiding Craft And Engines To China”
(Source: Justice, 2 Nov 2020)
Ge Songtao (50, Nanjing, People’s Republic of China) has pleaded guilty to conspiring to submit false export information through the federal government’s Automated Export System and to fraudulently export to China maritime raiding craft and engines, and attempting to fraudulently export that equipment in violation of U.S. law. Ge Songtao faces a maximum penalty of 15 years in federal prison. A sentencing date has not yet been set.
According to the plea agreement, Ge Songtao was the chairman of Shanghai Breeze Technology Co. Ltd., a company headquartered in Shanghai, China. Beginning in 2018, he was interested in identifying a source of supply of U.S.-manufactured combat rubber raiding craft equipped with engines that can operate using gasoline, diesel fuel, or jet fuel. These vessels and multi-fuel engines are used by the U.S. military and can be operated after being launched from a submerged submarine or dropped into the ocean by an aircraft. No comparable engine is manufactured in China.
One of Ge Songtao’s U.S.-based employees, co-defendant Yang Yang, attempted to order seven of the raiding craft equipped with these engines from a U.S. manufacturer. When the U.S. manufacturer suggested that Yang Yang purchase cheaper gasoline-fueled engines, she insisted that she wanted to purchase the military-model multi-fuel engines. To induce the manufacturer to sell this equipment, Yang falsely represented that her customer was an entity called United Vision Limited in Hong Kong, rather than Shanghai Breeze Technology Co. in Shanghai. One of Yang’s Chinese co-workers had told her that American manufacturers would be more likely to sell to an entity in Hong Kong rather than one in mainland China. By misrepresenting what company was buying the equipment, and where it was located, Yang caused the entry of false information in the Department of Commerce’s Automated Export System in violation of federal law. …
On September 15, 2020, Yang Yang pleaded guilty to the same two charges to which Ge Songtao has pleaded guilty. On August 13, 2020, co-defendant Zheng Yan pleaded guilty to conspiring to submit false export information and to fraudulently export the raiding craft and engines in violation of U.S. law. The trial of remaining co-defendant Fan Yang, is scheduled to begin on February 1, 2021. …
EU Commission Publishes Proposal Granting a Union General Export Authorisation for Certain Dual-Use Items for UK and Northern Ireland
(Source: European Commission, 4 Nov 2020)
Commission Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Council Regulation (EC) No 428/2009 by granting a Union General Export Authorisation for the export of certain dual-use items from the Union to the United Kingdom of Great Britain and Northern Ireland was adopted on 4 November 2020.
Find the relevant publication here.
EU Commission: “Civil Society Dialogue with Rupert Schlegelmilch on EU-US Tade Relations after the US Elections”
(Source: European Commission, 5 Nov 2020)
- Date: 26/11/2020, 11:00-13:00
- Location: Webex
- Registration closes on: 23/11/2020 12:00
The transatlantic trade and investment partnership remains a central artery of the global economy, key to jobs and prosperity on both sides of the Atlantic and with trade in goods and services between the EU and the US worth over USD 1 trillion per year before the COVID-19 pandemic. The investment relationship is also unique, as the EU and the US invest more in each other’s markets than in all other markets combined. The relationship builds on strong fundamentals but has also undergone changes and been subject to important bilateral tensions over the last years.
It is in this context that the EU will need to engage with the US administration coming out of the elections on 3 November. It will continue to be a relationship marked by its sheer size, current and potential tensions as well as the need to also design a positive bilateral trade agenda.
Rupert Schlegelmilch, Acting Deputy Director-General in the Directorate General for Trade, responsible for EU-US trade relations, will give an overview on the state of play and prospects of EU-US trade relations and engage in exchanges with civil society organisations.
Rupert Schlegelmilch, Acting Deputy Director-General, Directorate General for Trade, European Commission
Deputy Head of Unit, Information, Communication and Civil Society Unit, Directorate General for Trade, European Commission
1. Presentation of the state of play of EU-US trade relations
2. Open discussion with stakeholders