U.S. EXPORT SANCTIONS  APPLICABLE AGAINST COUNTRIES AND END USERS

By Margaret M. Gatti, Esquire
Gatti & Associates
August 2003

(Update April 2007)

All Rights Reserved

The United States maintains export sanctions against various countries and against various end users. These sanctions take the form of export prohibitions and export restrictions (i.e., export licensing requirements). While some of these sanctions apply across the board to all U.S. exports, others have more limited scope and apply only to certain U.S. exports. To discern which export sanctions apply to which export transactions, it is first necessary to identify the export control jurisdiction that governs the product, which is to be exported.  This is because the application of U.S. export sanctions against a specific U.S. export is determined in accord with the export control jurisdiction that governs the exported product.  

Export control jurisdiction for products rests principally with the Directorate of Defense Trade Controls (DDTC) in U.S. Department of State and with the Bureau of Industry and Security (BIS, formerly known as the Bureau of Export Administration or BXA) in the U.S. Department of Commerce.  The determination as to the applicable export control jurisdiction for a particular product is based on the nature of the product.  In general, products that are specifically designed, developed, configured, adapted or modified for a military application (i.e., defense articles) are subject to DDTC’s export control jurisdiction, whereas products that qualify as dual use items (i.e., items that have a civil end use, a commercial end use or a civil/commercial end use as well as a military end use) are subject to the export control jurisdiction of the Commerce Department.

U.S. Export Sanctions Applicable to Defense Articles

The U.S. export sanctions that apply to the export of defense articles are comprised of sanctions against various countries as well as sanctions against various end users.    

Countries, which are currently subject to U.S. export sanctions in the case of defense article exports, are basically “off-limits” to defense article exports, i.e. the sanctioned countries are prohibited destinations for defense article exports.  These countries are individually specified by name in two separate and distinct U.S. Government-issued embargoed country lists, i.e., the State Department’s Embargoed Country List and the Treasury Department’s Embargoed Country List For Exports.  The Treasury Department’s Embargoed Country List For Exports overlaps completely with the State Department’s Embargoed Country List and currently (as of April 2007) lists four countries, i.e. Cuba, Iran, Sudan, and Syria.  In addition to these four countries, the State Department’s Embargoed Country List is currently (as of April 2007) comprised of 20 other countries; namely: Afghanistan, Burma, Belarus, China (PRC), Cote d'Ivoire, Cyprus, Haiti, the Democratic Republic of the Congo, Eritrea, Haiti, Iraq, Lebanon, Liberia, North Korea, Rwanda, Somalia, Venezuela, Vietnam, Yemen, and Zimbabwe.   The significance of U.S. export sanctions against various countries in relation to defense article exports is that exports of defense articles are currently prohibited to 24 separate countries.  

End users, which are currently (as of April 2007) subject to U.S. export sanctions in the case of defense article exports, are prescribed on five (5) separate and distinct U.S. Government-issued "bad guy lists", namely: (1) the Debarred Parties List; (2) the Nonproliferation Sanctions List; (3) the Specially Designated Nationals List; (4) the Denied Persons List; and (5) the General Order No. 3 to Part 736 of the Export Administration Regulations (EAR).  These lists spell out prohibited end users to whom exports of defense articles cannot be made in any transaction. 

U.S. Export Sanctions Applicable to Dual Use Items

Similar to the export sanctions that apply to the export of defense articles, the U.S. export sanctions that apply to the export of dual use items are comprised of sanctions against various countries as well as sanctions against various end users.    

Countries, which are currently subject to U.S. export sanctions vis a vis the export of dual use items, represent prohibited destinations for dual use exports.  The number of countries considered to be prohibited destinations for dual use exports, however, is far less than the number of countries that are “off limits” to defense articles.  Whereas 24 countries are currently (as of April 2007) prohibited destinations for defense article exports, only four countries are currently (as of April 2007) prohibited destinations for dual use exports.  These countries are individually specified by name in two separate and distinct Government-issued embargoed country lists, i.e., the Commerce Department’s Embargoed Country List and the Treasury Department’s Embargoed Country List For Exports.  The embargoed country list of the Commerce Department and the embargoed country list of the Treasury Department for Exports currently overlap fully in the case of export sanctions.  They each proscribe the following four countries; namely: Cuba, Iran, Sudan, and Syria. 

The significance of U.S. export sanctions against these four countries in relation to dual use exports is that exports of dual use items are currently prohibited to these four countries, except as otherwise specifically provided in the sanctions regulations for each of the named countries and except as otherwise provided in the Trade Sanctions reform Act (TSRA).  At the moment, exceptions to the dual use export prohibitions against the four sanctioned countries permit the following:

1.   Cuba: The sale and export under special license from the U.S. Commerce Department of food, agricultural commodities, medicine and medical supplies to independent nongovernmental entities in Cuba.

2.   Iran: The sale and export under special license from the U.S. Treasury Department (Office of Foreign Assets Control) of agricultural commodities, medicine and medical devices. The sale and export from the U.S. of low-level goods and technology to third countries for incorporation into or for substantial transformation into foreign-made end products destined for Iran, provided that the U.S. content in such foreign-made end products is “unsubstantial” as defined in the U.S. sanctions regulations against Iran.

3.   Sudan: The sale and export under special license from the U.S. Treasury Department (Office of Foreign Assets Control) of agricultural commodities, medicine and medical devices. 

4.   Syria:  The sale and export under a special license from the U.S. Commerce Department for food and medicine only.

End users, which are currently subject to U.S. export sanctions in the case of dual use exports, are listed on seven (7) separate and distinct U.S. Government-issued “bad guy lists."  These seven lists include: (1) the Debarred Parties List; (2) the Nonproliferations Sanctions List; (3) the Denied Persons List; (4) the Entity List; (5) the Unverified List; (6) the General Order No. 3 to the EAR;  and (7) the Specially Designated Nationals List. These seven lists can be found on the BIS web site at www.bis.doc.gov/ComplianceAndEnforcement/ListsToCheck.htm.  Five of these lists (the State Department's Debarred Parties List and Nonproliferation Sanctions List; the Commerce Department’s Denied Persons List and General Order No. 3 of Part 736 of the EAR; and the Treasury Department’s Specially Designated Nationals List) spell out prohibited end users to whom exports of dual use items cannot be made in any event, whereas the other two lists (the Commerce Department’s Entity List and the Unverified List) spell out restricted end users to whom exports of dual use items cannot be made without a Commerce Department export license, unless otherwise prescribed by law or regulation.

Violations of U.S. Export Sanctions

To avoid violating U.S. export sanctions in the case of defense article exports and in the case of dual use exports, U.S. exporters must screen their export transactions against sanctioned destinations and sanctioned end users.  Ultimate destinations must be screened to insure that they do not represent a country that is currently subject to U.S. export sanctions.  Likewise, end users must be screened to insure that they do not represent an end user that is currently subject to U.S. export sanctions.  

Exporters who fail to conduct such ultimate destination screenings and such end user screenings do so at their own peril, in that most U.S. export sanctions apply a strict liability standard against violators.  This means that an exporter’s liability for violating a U.S. export sanction does not depend on proof of the exporter’s intent to violate the export sanction or on proof of the exporter’s knowledge that an export sanctions violation will occur. 

Instead, the strict liability stand applicable to U.S. export sanction violations will cause an exporter to be liable for an export sanction violation based solely on the exporter’s absolute duty to comply with such export sanction.  The fact that an exporter who violates a strict liability export sanction did not know that such export sanction existed is of no consequence – - the exporter will be held liable for the violation without regard to the exporter’s intent or state of knowledge. 

Nothing Stays the Same               

Even though a U.S. exporter may have correctly assessed the U.S. export sanctions that are applicable to his products at any one specific time, such exporter should never assume that the U.S. export sanctions found to be relevant to a particular product at one point in time will remain relevant forever.  U.S. export sanctions result from Presidential and/or Congressional action related to concerns over national security, foreign policy, and other such critical concerns.  Consequently, as Presidential and/or Congressional concerns over these matters shift, export sanctions will likely be subject to change.  The frequency and unpredictability of changes in or to U.S. export sanctions make it clear that U.S. exporters can never become complacent with regard to the U.S. export sanctions that they encounter in exporting their products.  Indeed, a steady review process is warranted as U.S. export sanction violations have serious repercussions, ranging from denial of export privileges and product seizure through monetary fines to imprisonment.