February 2010
Written by Jason M. Wong Tuesday, 09 February 2010 00:00
Hopefully, you survived the 2010 SHOT show in good order. Personally, I'm still battling the annual SHOT Show cold that I seem to catch and bring home every year. I don't have much to report on ATF this month, but there's LOTS of new information from the U.S. State Department.
As usual, I welcome your suggestions, comments, and concerns. If you wish to discuss any of these items, please do not hesitate to call or email.
ATF Update
ATF Releases the annual List of Explosives:
The Department of Justice must publish and revise the explosives list annually, pursuant to 18 U.S.C. 841. The 2009 list does not contain any new terms. However, ammonium perchlorate composite propellant (frequently used in model rocketry) has been removed from the list.
ATF notes that the list is comprehensive, but is not all-inclusive. An explosive material may not be on the list, but may still be within the coverage of the law if it meets the statutory definitions. The 2009 list may be found here: http://edocket.access.gpo.gov/2010/pdf/2010-45.pdf
ATF Announces Final Rule on Storage of Shock Tube With Detonators
ATF announced a final rule amending regulations in 27 CFR Part 555 to allow storage of shock tube with detonators. ATF has determined that these materials, when stored together do not pose a mass detonation hazard.
The rule can be found at: http://edocket.access.gpo.gov/2010/pdf/2010-891.pdf
Ernie Lintner, moving to a new position
Ernie Lintner, an upcoming ATF insider (and current acting Chief, NFA Branch) has accepted a new position in Harrisburg, PA. He will reportedly be transitioning to the new position in March 2010. Ernie assures me that he will complete the SBR FAQ prior to leaving NFA branch.
Commerce Department Update
Guidance released regarding freight forwarders:
The U.S. Commerce Department, Bureau of Industry and Security release guidance on the use of freight forwarders in the transit of goods to international buyers. While most of the guidance is straight forward, exporters are reminded that liability for improper export lies with the exporter, and not the freight forwarder. If you need a recommendation for an experienced freight forwarder with experience moving firearms and ammunition, I would be happy to provide recommendations.
http://www.bis.doc.gov/complianceandenforcement/freightforwarderguidance.htm
Additions to the Entity List
If you are conducting exports, (regardless of whether with Commerce or State) you MUST check the Government watch lists. The BIS provides links to the lists in one convenient location here: http://www.bis.doc.gov/complianceandenforcement/liststocheck.htm
The most recent version of the Entity list is listed here: http://www.bis.doc.gov/news/2010/entity_list_rule_01-13-2010.pdf
State Department Update
22 Arrested at SHOT for alleged violations of the Foreign Corrupt Practices Act:
The Foreign Corrupt Practices Act was signed into law by President Jimmy Carter on December 19, 1977, and amended in 1998 by the International Anti-Bribery Act of 1998. The anti-bribery provisions of the FCPA make it unlawful for a U.S. person, to make a payment to a foreign official for the purpose of obtaining (or retaining) business with any person. Since 1998, the law also applies to foreign firms and persons who act in furtherance of a corrupt payment while in the United States.
The official DOJ Press release is located here: http://www.justice.gov/opa/pr/2010/January/10-crm-048.html
If you are unfamiliar with the Foreign Corrupt Practices Act, or would like training on what is permissible under the law, please do not hesitate to contact me. I would be happy to discuss the issue with you.
Embargo on Niger:
The Directorate of Defense Trade Controls ("DDTC") announced today that applications for exports of defense items and services to Niger are likely to be delayed for long time:
"In response to recent events in the Republic of Niger (Niger), DDTC wishes to inform exporters that although there is no current U.S. or UN arms embargo on Niger, the final decision of license applications for the export of U.S. Munitions List (USML) items to Niger received from this date or currently in the review process may be delayed. License applications will continue to be reviewed on a case-by-case basis, but approval should not be assumed. We encourage exporters to take the current situation into account and if applying for a new license to export or re-export USML items to Niger, that the license application provide detailed information on the end-use and end-user of the USML items."
DDTC Updates the Firearm and Ammunition Export Guidelines:
Directorate of Defense Trade Controls announced that it had updated its "Guidelines for the Permanent Export, Temporary Export and Temporary Import of Firearms and Ammunitions." Although DDTC did not identify or explain the changes in the guidelines, the changes appear to be restricted to one paragraph marked in red. That paragraph, which can be found on page 7, reads:
"Where the exporter uses an in–transit point (or points) in a country other than that of the ultimate destination, an authorization issued by the foreign government of the transit country authorizing the transit of the specified items must also accompany each application to export. Where items are temporarily imported into the U.S. for the purposes of transit or transshipment to other OAS countries, an Import Authorization, comprised of either a permit or a certificate issued by the foreign government authorizing the import of specified items, must accompany each application to import."
This paragraph requires that temporary import of firearms through the United States for another member of the Organization of the American States ("OAS") be accompanied by an import authorization from the destination state. This is appears to be an effort to conform to the requirement of Article IX(2) of the OAS Firearms Convention.
The other requirement, that an export license application for firearms that transit another country prior to the ultimate destination must be accompanied by a transit permit from the transiting country, appears to come from the requirement of Article 10(2)(b) of the U.N. Firearms Protocol which hasn't been signed or ratified by the United States.
Criminal Liability for Failing to Register as Broker with DDTC:
Virginia-based Taipan Enterprises Ltd. pleaded guilty to, and paid a $15,000 fine for, charges that it illegally engaged in arms-brokering without registering with, and obtaining licenses from, the Directorate of Defense Trade Controls ("DDTC"). The Statement of Facts
that supported the guilty plea revealed that Taipan's woes began when its President, Ioannis Papathanassiou, was questioned by U.S. Customs upon returning from Brazil and told the customs agents that he was in Brazil selling farm equipment. An inspection of his luggage revealed product brochures for military vehicles, which Papathanassiou allegedly falsely stated were for farming purposes.
The Statement of Facts detailed subsequent transactions that involved the attempted sale of night vision goggles, machine pistols, M4 rifles and gas grenades among other items. Significantly, however, there is no allegation that any of the sales ever occurred. Instead, in each instance, the Statement of Facts said that Papathanassiou "attempted" to sell the items. Notwithstanding that the only charges against Papathanassiou related to transactions that were attempted but uncompleted, he was charged with arms brokering without registering with DDTC as an arms-broker or obtaining necessary licenses for arms-brokering. Apparently just discussing a potential transaction requires registration.
The problem with this theory is, of course, the definition of "broker" in Part 129 of the International Traffic in Arms Regulations under which Taipan was charged. Under that definition, found in section 129.2(a), "broker" is defined as:
any person who acts as an agent for others in negotiating or arranging contracts, purchases, sales or transfers of defense articles or defense services in return for a fee, commission, or other consideration.
It's unlikely that Papathanassiou received a fee or commission for sales that never occurred. I'm uncertain whether this was sloppy lawyering on the part of Papathanassiou, or an overzealous prosecutor. Either way, Papathanassiou plead guilty to the allegations and the company paid a fine.
Where in the World is Jason?
All travel performed on behalf of clients is held in confidence, and will never be listed within this section.
February 2010: February 7 – 10, 2010. Honolulu, Hawaii
March 2010: IWA and Outdoor Classics, in Nuremberg, Germany from March 10 – 17, 2010.
April 2010: Defense Services Asia, in Kuala Lumpur, Malaysia, from April 17 - 24, 2010.
If our paths cross, I look forward to seeing you soon.