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This chapter discusses the Department of Commerce’s implementation of comprehensive and partial embargoes maintained by the U.S. Government pursuant to the Export Administration Regulations (EAR), either unilaterally or to implement UN Security Council (UNSC) Resolutions. Specifically, the U.S. Government maintains comprehensive economic embargoes on Cuba, Iran, Sudan, Syria, and certain designated terrorist persons or groups. The U.S. Government also maintains certain partial embargoes, including programs relating to Rwanda and Iraq, consistent with international obligations.
On March 7, 2005, the Department of Commerce published an amendment to the EAR in the Federal Register (70 FR 10865) on the Bureau of Industry and Security’s licensing policy regarding transactions involving entities sanctioned by the Department of State. The rule covers entities sanctioned under three specified statutes the Iran-Iraq Arms Nonproliferation Act of 1992 (Pub. L. 102-484), the Iran Nonproliferation Act of 2000 (Pub. L.107-178), and Section 11B(b)(1) of the Export Administration Act of 1979. The amendment creates new Section 744.19 of the EAR, which specifies that the Department of Commerce will deny applications to export or reexport items subject to the EAR to entities sanctioned by the Department of State under the authorities of the three statutes. The amendment also creates new Section 744.20 of the EAR, imposing new foreign policy-based controls on items subject to the EAR to entities sanctioned by the State Department. The Department of Commerce imposed these foreign policy-based controls in Section 744.20, which are in addition to those imposed by other provisions of the EAR, on a case-by-case basis. Finally, the amendment identifies a new entity (Tula Design Bureau of Russia) as subject to the license requirement under Section 744.20. The Department adopted this rule in final form on June 9, 2005 (70 FR 33693).
On February 18, 2005, the Department of Commerce published an amendment to the Export Administration Regulations in the Federal Register authorizing the export under revised License Exception “Temporary Imports, Exports and Reexports” (TMP) of certain items controlled on the Commerce Control List to Sudan for use in humanitarian activities (70 FR 8251). Items authorized under this amendment include basic telecommunications devices controlled under export classification control number (ECCN) 5A991, low-level computers controlled under ECCN 4A994, parts and components of authorized 4A994 and 5A991 items controlled under ECCN 5A992, global positioning systems and similar satellite receivers controlled under ECCN 7A994, and software controlled under ECCNs 4D994 and 5D992. These items are for use in Sudan by the staff and employees of eligible non-governmental organizations working to relieve human suffering in Sudan. As a result of the dual-license requirement for Sudan (that is, authorization is required from both the Departments of Commerce and Treasury), end-users eligible to receive the items identified as authorized under the revised license exception are those already in receipt of authorization to operate in Sudan from the Department of the Treasury.
The Department of Commerce requires a license for export or reexport to Cuba of virtually all commodities, technology, and software subject to the EAR, with a few narrow exceptions including:
The Department generally denies license applications for exports or reexports to Cuba. However, the Department considers applications for the following on a case-by-case basis:
The Department of Commerce reviews applications for exports of donated and commercially supplied medicine or medical items to Cuba on a case-by-case basis, pursuant to the provisions of Section 6004(c) of the Cuban Democracy Act of 1992. The United States does not restrict exports of these items, except in the following cases:
The Department of Commerce authorizes the use of License Exception Agricultural Commodities (AGR) for U.S. exports and certain reexports of agricultural commodities to Cuba. Section 906(a)(1) of the Trade Sanctions Reform and Export Enhancement Act of 2000 (Title IX of Pub. L. 106-387), as amended (TSRA), requires the expedited review of proposed exports of agricultural commodities to Cuba. Under License Exception AGR, an exporter must submit prior notification of a proposed transaction to the Department of Commerce. The exporter may proceed with the shipment when the Department confirms that no reviewing agency has raised an objection (generally within 12 business days), provided the transaction meets all of the other requirements of the license exception. This expedited review includes the screening of the ultimate recipient of the commodities to ensure that it is not involved in promoting international terrorism. Exports of medicines and medical devices to Cuba are not eligible for License Exception AGR and continue to be subject to the license application and review requirements of Section 6004(c) of the Cuban Democracy Act of 1992.
The Department of the Treasury’s Office of Foreign Assets Control (OFAC) administers the comprehensive trade and investment embargo against Iran. No person may export or reexport items subject to both the EAR and OFAC’s Iranian Transactions Regulations without prior OFAC authorization.
The U.S. Government has a general policy of denial for all items controlled for chemical, biological, missile, and nuclear proliferation reasons; military-related items controlled for national security or regional stability reasons (ECCNs ending in the number 18); and all other items controlled for national security or foreign policy reasons; for all end-users in Iran.(1) Pursuant to Executive Order 12959 of May 6, 1995, and Executive Order 13059 of August 19, 1997, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports of Commerce Control List (CCL) items to Iran and is responsible for licensing: (1) exports from the United States to Iran; (2) exports and reexports by U.S. persons to Iran, including agricultural and medical items classified as EAR99 (items not on the CCL but subject to the EAR) under the provisions of TSRA; and (3) reexports of CCL items by any person to Iran. The Department of Commerce has licensing responsibility for reexports of EAR99 items to Iran by non-U.S. persons and for the deemed export of technology subject to the EAR to Iranian nationals in the United States. To reinforce controls administered by the Department of the Treasury, it is also a violation of the EAR to export or reexport to Iran any item that is subject to the Treasury Department’s regulations, and also subject to the EAR, without Treasury’s authorization.
On May 22, 2003, the United Nations Security Council (UNSC) issued Resolution 1483 that lifted the comprehensive UNSC trade sanctions on Iraq, while retaining restrictions on the sale or supply to Iraq of arms and related materiel. Resolution 1483 also reiterated certain provisions of related UNSC Resolutions 707 of August 15, 1991, and 687 of April 3, 1991. In particular, those provisions require that Iraq eliminate its nuclear weapons program and restrict its nuclear activities to the use of isotopes for medical, industrial, or agricultural purposes. Such provisions further mandate the elimination of Iraq's chemical and biological weapons programs, as well as programs for ballistic missiles with ranges greater than 150 km. On July 30, 2004, the Department of Commerce published a rule defining the new licensing policy and requirements for Iraq. The new policy and requirements are covered in Chapter 4 of this report.
In administering the UN arms embargo, the Department of Commerce requires a license for the export or reexport to Iraq, or transfer within Iraq, of:
The Department reviews license applications for these items under a general policy of denial.
In addition, the Department requires a license for the export, reexport, or transfer of items subject to the EAR if the exporter knows, has reason to know, or is informed by the Department that the item will be, or is intended to be, used in Iraq for a “military end-use” or a “military end-user,” as defined in Section 746.3 of the EAR. As defined specifically for Iraq, a military end-user is any person or entity whose actions or functions are intended to support “military end-uses” and who is not recognized as a legitimate military organization by the U.S. Government. “Military end-use” is the incorporation of an item into a military item described on the U.S. Munitions List (USML)(22 CFR part 121, International Traffic in Arms Regulations), or the Wassenaar Arrangement Munitions List (WAML); or use, development, or deployment of military items described on the USML or the WAML. The Department reviews license applications destined to such end-users under a policy of denial.
The U.S. Government maintains an embargo on the sale or supply of arms and related materiel to Ivory Coast (known formally as Côte d'Ivoire), consistent with United Nations Security Council Resolution 1572 and the United Nations Participation Act (see the Department of State’s Public Notice of December 14, 2004, published in the Federal Register (69 FR 74560)). The Department of Commerce already required a license to export items controlled on the Commerce Control List for crime control or regional stability reasons to Ivory Coast, under a licensing policy requiring case-by-case review (see Chapter 2). The Department expects to implement the arms embargo against Ivory Coast in the near term through an amended regulation to be published in the Federal Register.
The UNSC imposed an arms embargo on Rwanda on May 17, 1994. In 1995, the United Nations Security Council suspended the application of the arms embargo to the Government of Rwanda for items shipped through specified points of entry. Effective September 1, 1996, the Council terminated the application of these restrictions on sales or supplies to the Government of Rwanda. The sale or supply of such arms and arms-related materiel to non-governmental forces in Rwanda, however, remains prohibited.
On July 30, 2003, the Department of State implemented the partial lifting of the arms embargo for those items subject to the International Traffic in Arms Regulations (ITAR) destined for the Government of Rwanda. The Department of Commerce will implement a comparable partial lifting of the arms embargo by amending the EAR. Until it does so, arms and related materiel subject to Department of Commerce licensing jurisdiction remain under embargo to all end-users in Rwanda. The U.S. Government continues to require a license for foreign policy purposes for the export or reexport by a U.S. person to any non-government end-user in Rwanda of all ITAR-controlled arms and arms-related materiel of all types, regardless of origin, including weapons and ammunition, military vehicles and equipment, paramilitary police equipment, and spare parts for these items. The embargo applies to all end-users for all arms and arms-related material controlled in the EAR. The U.S. Government also requires a license for the use of any U.S. aircraft or vessel to supply or transport any such items to Rwanda. The U.S. Government has a general policy of denial for export or reexport of ITAR-controlled items to non-government end-users and EAR-controlled items to all end-users in Rwanda. The Department reviews proposed exports or reexports to the Government of Rwanda on a case-by-case basis.
Pursuant to Executive Order 13067 of November 3, 1997, the Department of the Treasury maintains comprehensive trade restrictions on exports and reexports to Sudan. However, the Department of Commerce retains its Sudan specific anti-terrorism regulations, as described in Chapter 4. The Department of the Treasury is solely responsible for licensing the export of agricultural and medical items not listed on the CCL to Sudan under the provisions of TSRA.
The Department of Commerce has a general policy of denial for the export and reexport of all items controlled for chemical, biological, missile, and nuclear proliferation reasons, military-related items controlled for national security or regional stability reasons (CCL entries ending in the number 18), and certain items controlled for national security or foreign policy reasons, such as aircraft, cryptologic items, and explosive device detectors, for all end-users in Sudan. Other items controlled to Sudan for national security or foreign policy reasons are subject to a policy of denial for military end-users or end-uses and are reviewed on a case-by-case basis for non-military end-users or end-uses.
In November 2004, in order to facilitate shipment authorization for humanitarian items destined for use in Darfur, the Department began accepting license applications for exports and reexports requiring a license for shipment to Sudan concurrently with applications submitted to OFAC. Previously, the Department maintained a policy of reviewing applications for items destined for end-use in Sudan only after the applicant received authorization from OFAC.
On February 18, 2005, the Department of Commerce published in the Federal Register an amendment to the Export Administration Regulations authorizing the export under revised License Exception “Temporary Imports, Exports and Reexports” (TMP) of certain items controlled on the Commerce Control List to Sudan for use in humanitarian activities only (70 FR 8251). Items authorized under this amendment include basic telecommunications devices controlled under export classification control number (ECCN) 5A991, low-level computers controlled under ECCN 4A994, parts and components of authorized 4A994 and 5A991 items controlled under ECCN 5A992, global positioning systems and similar satellite receivers controlled under ECCN 7A994, and software controlled under ECCNs 4D994 and 5D992. These items are eligible for License Exception TMP when for use in Sudan by the staff and employees of eligible non-governmental organizations working to relieve human suffering. The eligible non-governmental organizations must be licensed as such by the Department of the Treasury’s Office of Foreign Assets Control. As a result of the U.S. Government’s dual-license requirement for Sudan for all Commerce Control List items (that is, authorization is required from both the Departments of Commerce and Treasury for exports to Sudan), end-users eligible to receive the items identified as authorized under the revised License Exception TMP are those already in receipt of authorization from the Department of the Treasury to operate in Sudan. License applications for exports and reexports of items necessary for the support of United Nations activities in Sudan are considered on a case-by-case basis. [NOTE: The Department of the Treasury’s Office of Foreign Assets Control continues to require a license for the export of EAR99 items to Sudan.]
On May 11, 2004, the President issued Executive Order 13338 to implement Sections 5(a)(1) and 5(a)(2)(A) of the SAA. The Department of Commerce revised its license requirements and licensing policy for Syria to restrict all exports or reexports to Syria of items subject to the EAR, as specified in General Order No. 2 to Supplement No. 1 to Part 736 of the EAR, which was published in the Federal Register on May 14, 2004 (69 FR 26766).
The Department of Commerce requires a license for export or reexport to Syria of virtually all commodities, technology, and software subject to the EAR, except:
The Department generally denies license applications for exports or reexports to Syria. However, the Department considers applications for the following on a case-by-case basis:
The Department of Commerce requires a license for the export from the United States or by U.S. persons of all items subject to the EAR to Specially Designated Global Terrorists (SDGTs), Specially Designated Terrorists (SDTs), and Foreign Terrorist Organizations (FTOs). The Department of Commerce also requires a license for the reexport by non-U.S. persons of items on the CCL to such SDGTs, SDTs, or FTOs and a general policy of denial applies to all applications. SDGTs, SDTs, and FTOs are identified on a list of designated persons maintained by the Department of the Treasury in Appendix A to 31 CFR Chapter V.
On March 7, 2005, the Department of Commerce published an amendment in the Federal Register (70 FR 10865) on the Bureau of Industry and Security’s licensing policy regarding transactions involving entities sanctioned by the Department of State. The rule covers entities sanctioned under three specified statutes the Iran-Iraq Arms Nonproliferation Act of 1992 (Pub. L. 102-484), the Iran Nonproliferation Act of 2000 (Pub. L.107-178), and Section 11B(b)(1) of the Export Administration Act of 1979. The amendment creates new Section 744.19 of the EAR, which specifies that the Department of Commerce will deny applications to export or reexport items subject to the EAR to entities sanctioned by the Department of State under the authorities of the three statutes. The amendment also creates new Section 744.20 of the EAR, imposing new foreign policy-based controls on items subject to the EAR to entities sanctioned by the State Department. The Department of Commerce has decided to impose these foreign policy-based controls in Section 744.20, which are in addition to those imposed by other provisions of the EAR, on a case-by-case basis. Finally, the amendment identifies a new entity (Tula Design Bureau of Russia) as subject to the license requirement under Section 744.20. The Department adopted this rule in final form on June 9, 2005 (70 FR 33693).
The United States imposed an embargo four decades ago because Cuban Government actions posed a serious threat to the stability of the Western Hemisphere, and the Cuban Government expropriated property of U.S. citizens without compensation. In March 1982, as a result of Cuba’s support for insurgent groups that engaged in terrorism, the Secretary of State designated it as a state sponsor of terrorism under Section 6(j) of the Act. The purpose of the controls is to restrict exports that would allow Cuba to act as a destabilizing force and/or to support terrorism. The controls demonstrate the United States’ resolve to maintain stability in the region and to actively work against the threat of terrorism and those who support it. At the same time, U.S. support for the export of food, “gift packs,” and other humanitarian items, such as medicines and medical devices, ensures that the Cuban population is not deprived of basic human needs.
The purpose of the controls is to restrict exports of items that would be useful in enhancing Iran’s military terrorist-supporting capabilities and to address other U.S. foreign policy concerns, including nonproliferation, human rights, and regional stability. In the Department of State’s Country Reports on Terrorism 2004, dated April 2005, Iran is still identified as the most active state sponsor of terrorism. Iran maintained a high-profile role in encouraging anti-Israel activity, and continued to be unwilling to bring to justice detained al-Qa’ida figures. The U.S. Government also has grave concerns regarding Iran’s nuclear activities and lack of cooperation with the International Atomic Energy Agency (IAEA). U.S. export controls remain in place due to both our terrorism concerns and Iran’s nuclear activities. By restricting the export of items with military use, the controls demonstrate the resolve of the United States not to provide any direct or indirect military support for Iran and to support other U.S. foreign policy objectives. The United States’ support for exports and reexports of food items, medical supplies, and medical equipment ensures that the Iranian population receives what it needs for humanitarian purposes.
The purpose of the controls is to restrict exports to insurgents within Iraq and other inappropriate military end-users in Iraq, including the former Iraqi leadership, thereby limiting their ability to enhance or expand their activities.
The controls on arms-related items to Ivory Coast remain in place to prevent any U.S. contribution to potential conflict within the country and to conform to United Nations-mandated sanctions.
The controls on arms-related items to Rwanda remain in place to prevent any U.S. contribution to potential conflict within the country and to conform to United Nations-mandated sanctions.
Although the Government of Sudan has cooperated in U.S. counterterrorism efforts in the war on terror, the United States continues to have concerns about the presence in Sudan of Palestinian rejectionist groups, including HAMAS and the Palestine Islamic Jihad (PIJ).
On January 9, 2005, a Comprehensive Peace Agreement was signed between the Government of Sudan and the Sudan People’s Liberation Movement/Army (SPLM/A). The Agreement provides for a new constitution and new arrangements for power sharing, wealth sharing, and security, on the national level. On July 9, 2005, the government of National Unity, which includes participants from both the Government of Sudan and the SPLM/A, was installed and on July 6, a new constitution was ratified. However, the humanitarian crisis in Darfur remains an important focus of U.S. policy efforts. Although large-scale conflict in Darfur decreased as of July 2005, attacks on humanitarian operations have increased.
The U.S. embargo and export controls remain in place against Sudan to restrict access to items that could make a significant contribution to Sudan’s military capability and ability to support international terrorism. The United States will not normalize relations with Sudan until the situation in Darfur is satisfactorily addressed.
The new license exception TMP will facilitate the humanitarian efforts that the United States continues to support for the people of Sudan afflicted by conflict. Since Fiscal Year 2003, the United States has contributed almost $800 million in humanitarian aid for the Darfur emergency. Over $500 million of these monies were contributed in Fiscal Year 2005 alone.
The Syrian Government continues to provide political and material support to a number of Palestinian groups that have committed terrorist acts, but contends that the groups’ offices in Syria only undertake political and informational activities. Syria also allows Iran to resupply Hizballah in Lebanon through Syrian territory. Prior to Operation Iraqi Freedom, the U.S. Government had several areas of concern particular to Syria and its neighbor, Iraq, including Syria’s illicit oil trade with the Saddam Hussein regime and the illicit transshipment of dual-use and military-related items into Iraq. The U.S. Government continues to view with grave concern the unmonitored movement of anti-Coalition insurgents across the Syria-Iraq border. Additionally, the U.S. Government continues to have concerns about Syria’s interference in Lebanon and provision of a safe haven for terrorist organizations as well as its nuclear, missile, and chemical/biological programs.
U.S. export controls reflect U.S. opposition to these activities. The controls also promote other U.S. foreign policy interests, including human rights and regional stability. The controls maintained on exports and reexports to Syria are consistent with the EAA, as implemented by the President.
The purpose of controls on designated terrorist persons and groups is to restrict exports of items that would be useful in enhancing the capability of SDGTs, SDTs, and FTOs to undertake terrorist acts and to further the general policy of the United States to prevent supporters of terrorism and terrorist elements from acquiring technology that might enhance terrorist capabilities. The controls enable the Department of Commerce to use its licensing and enforcement resources to support U.S. counterterrorism efforts by monitoring and investigating unlicenced exports, reexports, and diversion of items subject to the EAR to parties designated as terrorists by the U.S. Government.
1. Probability of Achieving Intended Foreign Policy Purpose. The Secretary has determined that these controls are likely to achieve the intended foreign policy purpose, in light of other factors, including foreign availability from other countries. He has further determined that the foreign policy purpose cannot be achieved through negotiations or other alternative means. The restrictions have denied these persons and nations certain trade relations with the United States and other nations. The controls put pressure on these persons to modify their actions. In addition, the applicable controls may serve to reduce the potential for conflict.
The United States maintains an embargo against Cuba to express U.S. opposition to the continued repressive policies of the Castro government. The United States has modified the embargo on numerous occasions to aid the Cuban people in bringing about a peaceful transition to democracy and a free market economy and to expand humanitarian assistance to the Cuban people.
The controls on Iran restrict its access to specified U.S.-origin items that could be used to threaten U.S. interests in the region. The United States has sought, and will continue to seek, the cooperation of other countries in cutting off the flow of military and military-related equipment to Iran as well as in finding an appropriate resolution to Iran’s nuclear activities.
The United States’ adherence to the United Nations arms embargo and restrictions on exports, reexports, and transfers to certain Iraqi persons demonstrates U.S. opposition to the WMD activities of the former Iraqi regime and to the destabilizing influence of the insurgents currently operating in Iraq. In parallel with its obligations as a member of the United Nations, the United States will continue to adhere to the UN arms embargo, and will also continue to seek the cooperation of other countries in cutting off the flow of military goods, arms, and related materiel to inappropriate end-users in Iraq.
The embargo on exports of arms-related items to Ivory Coast is maintained consistent with UNSC action. Based on the multilateral nature of these controls, the probability is substantial that the desired effect will result.
The embargo on exports of arms-related items to Rwanda is maintained consistent with UNSC action. Based on the multilateral nature of these controls, the probability is substantial that the desired effect will result.
The controls on Sudan affirm the commitment of the United States to oppose Sudan’s ability to obtain and use U.S.-origin items in support of military activities. They also indicate opposition to terrorism and support of United Nations activities in Sudan and efforts to end the humanitarian crisis in Darfur.
The United States maintains controls in response to Syria’s lack of concrete steps to end support for the terrorist groups that maintain a presence in Syria. Although many other countries concur that Syria’s activities are destabilizing, few countries maintain controls similar to those implemented by the United States.
Controls on exports and reexports to SDGTs, SDTs, and FTOs are intended to prevent acts of terrorism and to affirm U.S. opposition to international terrorism by limiting the ability of designated terrorist organizations and individuals to obtain and use U.S.-origin items in terrorist operations.
2. Compatibility with Foreign Policy Objectives. The Secretary has determined that these controls are compatible with U.S. foreign policy objectives; and that the extension of these controls will not have any significant adverse foreign policy consequences. The controls complement U.S. foreign policy and other aspects of U.S. relations with these persons and countries. They encourage these persons and governments to modify their actions with the goal of improving conditions in their region. These controls are consistent with U.S. foreign policy goals of promoting peace and stability, and preventing weapons proliferation and human rights abuses.
3. Reaction of Other Countries. The Secretary has determined that any adverse reaction to these controls is not likely to render the controls ineffective, nor will any adverse reaction by other countries be counter-productive to U.S. foreign policy interests. Notwithstanding the fact that most countries have not imposed embargoes as comprehensive as those of the United States, and that some countries have challenged certain U.S. controls as unwarranted extraterritorial regulations, the overriding foreign policy objective of maintaining these controls outweighs negative foreign reactions. Opposition to U.S. foreign policy-based controls by many of our major trading partners, including some close allies, continues to be a point of contention. This reaction has led some foreign firms to design out U.S. components or to cite the lack of their own national sanctions as a marketing tool to secure business contracts that might have gone to U.S. companies. In some instances, foreign governments have instructed foreign firms to ignore U.S. reexport controls.
Although most countries recognize the right of the United States to determine its own foreign policy and security concerns and share U.S. concerns regarding the Cuban regime, many countries, particularly Canada, Mexico, and the members of the European Union, opposed the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 (Helms-Burton) and continue to oppose unilateral U.S. controls on Cuba. Many nations, however, have joined the United States in promoting political freedom, as a result of the Cuban Government’s March 2003 sentencing of 75 pro-democracy advocates to up to 28 years in prison.
Other countries share U.S. concerns regarding Iran’s support of terrorism, human rights abuses, and attempts to acquire WMD. Ongoing disclosures have also highlighted Iran’s efforts to develop its nuclear weapon capabilities. The member states of the G-8, the European Union, the members of the Nuclear Suppliers Group, and other multilateral bodies have joined the United States in expressing their concern over Iran’s nuclear activities and have called on Iran to cooperate more fully with the International Atomic Energy Agency (IAEA). France, the United Kingdom, and Germany have taken the lead in negotiating with Iran over the nuclear issue. The United States supports the efforts of those countries. In general, however, U.S. controls on commercial goods to Iran are more stringent than most other countries’ controls.
The United States continues to impose an arms embargo on Iraq in parallel with its obligations as a member of the United Nations. Many other member states also comply with these obligations and impose an arms embargo on Iraq. Other nations also share U.S. concerns about insurgent activities in Iraq.
The arms embargo on Ivory Coast is consistent with UN objectives. The U.S. Government has received no significant objections to these UNSC-mandated controls.
The arms embargo on Rwanda is consistent with UN objectives. The U.S. Government has received no significant objections to these UNSC-mandated controls.
The United States imposed an embargo in response to credible evidence that Sudan assists international terrorist groups, destabilizes neighboring governments, and violates human rights. Although the United States has been pleased with the progress made in Sudan, it continues to consult with key allies and urges them to take all possible measures to convince Sudan to halt its support of terrorism. The United States is also in consultation with other countries regarding the humanitarian crisis in Darfur.
The United States maintains controls in response to Syria’s lack of concrete steps to end support for the terrorist groups that maintain a presence in Syria. Although many other countries concur that Syria’s regional activities are destabilizing, few countries maintain controls similar to those implemented by the United States.
Many countries support U.S. efforts to fight terrorism through blocking designated terrorist groups and individuals from acquiring commodities that could assist these groups in committing future acts of violence. Although some countries are considering restrictive legislation, very few maintain export controls similar to those implemented by the United States.
4. Economic Impact on United States Industry. The Secretary has determined that any adverse effect of these controls on the economy of the United States, including on the competitive position of the United States in the international economy, does not exceed the benefit to U.S. foreign policy objectives.
The U.S. Government requires a license for the export and reexport of all U.S.-origin commodities, technology, and software subject to the EAR to Cuba. In recent years, the number of license applications that the Department of Commerce has approved to Cuba increased significantly, before decreasing somewhat in 2003. The increase in approved export license applications to Cuba can be attributed to changes made during the late 1990s in U.S. export policies, including the resumption of direct flights, exports of medicines and medical supplies and equipment, exports of food and certain agricultural commodities, and the expansion of agricultural commodities eligible for export authorization under the procedures specified in License Exception AGR to the Cuban Government.
In Fiscal Year 2005, the Department of Commerce approved 269 license applications valued at over $846 million for Cuba. There has been a decline in the number of license applications in Fiscal Year 2005 in comparison with Fiscal Years 2003 and 2004. In Fiscal Year 2005, the Department authorized 214 notifications valued at $2.24 billion under License Exception AGR. The Department of Commerce and reviewing agencies had no objections to these notifications.
Table 1: Approved Commerce Export License Applications and License Exception AGR Notifications Authorized for Cuba (FY 1996-2005)
| Fiscal Year | Number of Applications / Notifications | Total Value in U.S. Dollars |
|---|---|---|
| 1996 | 83 | $592,738,313 |
| 1997 | 87 | $493,414,819 |
| 1998 | 128 | $544,659,988 |
| 1999 | 181 | $75,840,789 |
| 2000 | 310 | $737,108,231 |
| 2001* | 241 | $454,908,260 |
| 2002* | 582 | $2,521,457,648 |
| 2003* | 181 | $2,801,868,688 |
| 2004* | 310 | $3,096,634,000 |
| 2005* | 241 | $3,091,221,021 |
| TOTAL (1997-2005) | 3,160 | $14,409,851,757 |
* Includes both license applications and notifications under License Exception AGR.
The majority of export licenses approved for Cuba in Fiscal Year 2005 (221 of the 269 cases) were for EAR99 items, including medicines and medical supplies, instruments, equipment, and gift parcels. Licenses for aircraft and ocean vessels on temporary sojourn accounted for 43 cases.
The U.S. embargo on Cuba is unilateral. According to the CIA’s World Factbook 2005, Cuba imported an estimated $5.3 billion in commodities in 2004 (the most recent year for which statistics are available). Leading Cuban imports include petroleum, foodstuffs, machinery, and chemicals. Cuba’s leading suppliers were Spain, Venezuela, the United States, China, Canada, Italy, and Mexico. In general, exporters and U.S. regions that would benefit from the cost advantages of U.S. proximity to Cuba are most affected by the trade embargo.
The U.S. Government maintains a policy of denial for license applications for dual-use exports to Iran, consistent with the provisions of the Iran-Iraq Arms Non-Proliferation Act of 1992, contained in the National Defense Authorization Act of Fiscal Year 1993 (NDAA), and the U.S. trade and investment embargo of 1995. Statistical data on past exports to Iran provide indications of the economic impact of sanctions, as mandated for this report. Prior to the 1993 NDAA and the imposition of the embargo, U.S. exports to Iran rose sharply in the early 1990s in response to Iran’s removal of certain import restrictions. From 1991 through 1994, U.S. exports to Iran totaled close to $2.2 billion, making the United States the sixth-largest exporter to Iran during this period. Such exports, however, amounted to only five percent of Iran’s total imports and less than one percent of overall U.S. exports. As a result of the denial policy mandated by Fiscal Year 1993 NDAA and the 1995 U.S. trade and investment embargo, U.S. exports to Iran fell dramatically. Beginning in 2001, as the result of the implementation of the TSRA, exports and reexports of food, agricultural equipment, medicine, medical supplies and medical equipment could be authorized. According to the CIA’s World Factbook 2005, in 2004 (the most recent year for which statistics are available), total U.S. exports to Iran were valued at $85 million. The top U.S. commodities exported to Iran were tobacco, pulpwood and wood pulp, medical equipment, and pharmaceutical preparations. Soybeans, which had been the top U.S. export to Iran in 2003, were not exported at all in 2004.
Since 1997, the Department of the Treasury has had primary jurisdiction for the export and reexport of items subject to the EAR to Iran, and the Department of Commerce has jurisdiction for “deemed exports” (transfers of controlled U.S. technology to Iranian nationals legally working in the United States). In Fiscal Year 2005, the Department of Commerce approved 31 deemed export licenses for Iranian nationals. Table 2 shows the impact of the 1993 NDAA and the trade embargo on U.S. trade with Iran:
Table 2: Approved Commerce Export License Applications to Iran (FY 1991-2005)
| Fiscal Year | Number of Applications |
Total Value in U.S. Dollars |
|---|---|---|
| 1991 | 89 | $ 60,149,182 |
| 1992 | 131 | $567,559,528 |
| 1993 | 44 | $ 63,834,952 |
| 1994 | 10 | $ 16,774,377 |
| 1995 | 0 | $0 |
| 1996 | 0 | $0 |
| 1997 | 5 | $19 |
| 1998 | 6 | $10,012 |
| 1999 | 10 | $20,408 |
| 2000 | 23 | $35 |
| 2001 | 19 | $32 |
| 2002 | 10 | $23 |
| 2003 | 16 | $36 |
| 2004 | 31 | $173 |
| 2005 | 31 | $60 |
| TOTAL (1991-2005) | 394 | $708,348,664 |
The U.S. trade and investment embargo transformed the composition of U.S. trade with Iran. As Table 3 demonstrates, the agricultural, aerospace, and oil industries have been among those most directly affected by the embargo. From 1991 through 1994, U.S. exports of aircraft engine parts to Iran totaled nearly $9.4 million, averaging $2.3 million per year and peaking at more than $7.5 million in 1994. By 1996, aerospace exports declined to virtually zero.
Prior to the embargo, the United States competed with Iran’s major trading partners in exports of industrial machinery, motor vehicles and auto parts, power generating machinery, measuring and controlling devices, computers, plastics and resins, and industrial organic chemicals. In 2004, Iran imported an estimated $31.3 billion worth of industrial raw materials and intermediate goods, capital goods, foodstuffs and other consumer goods, technical services, and military supplies from its leading trade partners: Japan, France, Italy, China, the UAE, South Korea, and Russia.
Table 3: Top U.S. Exports to Iran, 1991-1995 (FAS Value, in U.S. Dollars)
| S.I.C. Number | Description of Goods |
Total Value |
|---|---|---|
| 3511 | Turbines and turbine generator sets |
$322.5 million |
| 3531 | Construction machinery and parts |
$307.8 million |
| 3533 | Oil and gas field equipment |
$250.1 million |
| 2044 | Milled rice and by-products |
$166.3 million |
| 0115 | Corn |
$137.4 million |
| 2873 | Nitrogenous fertilizers |
$124.2 million |
| 3714 | Motor vehicle parts and accessories |
$50.8 million |
| 2821 | Plastics materials and resins |
$45.4 million |
| 3743 | Railroad equipment and parts |
$42.7 million |
| 3569 | General industrial machinery and equipment |
$41.8 million |
The U.S. embargo on Iran has had a damaging impact on U.S. industry, because of the reaction of foreign firms to U.S. reexport requirements. U.S. exporters report that their products are often designed out of foreign manufactured goods to ensure that foreign exports do not fall within the scope of U.S. controls. This “designing out” damages U.S. exports, both for sales to embargoed countries and non-embargoed countries.
Although the security situation and the presence of insurgents in Iraq, among other issues, continue to be of concern to the United States, the United States also fully supports Iraq’s reconstruction and economic revival. Current licensing policy and requirements reflect Iraq’s complexity and challenges.
From May 2003 through May 2004, U.S. exports to Iraq were valued at $432.2 million, which represents an increase of $398.7 million from the same time period in calendar years 2002 and 2003. In 2004, according to the most recent U.S. Census Bureau statistics available, U.S. exports to Iraq were worth $856.5 million. In addition to foodstuffs, other strong categories of U.S. exports to Iraq included generators and engines, telecommunications equipment, pharmaceutical preparations, and agricultural supplies.
Commerce’s July 30, 2004, rule on U.S. export control policy and regulations for Iraq was designed to address two significant foreign policy goals. In particular, the rule advances the goal of ensuring that exports and reexports of controlled items destined to civil infrastructure rebuilding do not suffer undue licensing delays. At the same time, in furtherance of applicable UNSC Resolutions and U.S. foreign policy interests, the rule revised section 746.3 of the EAR (15 CFR parts 730-799) and retains substantial restrictions on exports to Iraq destined for inappropriate end-users or end-uses.
Since licensing jurisdiction for Iraq was returned to the Department of Commerce, the majority of license applications received have been for equipment in support of or for use in reconstruction of Iraq and training activities for its police and military. The Department expects that the number and diversity of applications will increase as more U.S. companies begin work in Iraq.
The arms embargo on Ivory Coast has had little impact on U.S. industry. In 2004, U.S. exports to Ivory Coast were valued at $118.1 million with rice, plastic materials, and drilling and oil field equipment topping the list.
The arms embargo on Rwanda has had little impact on U.S. industry. Total Rwanda imports were estimated to be valued at $260 million in 2004. Leading imports for Rwanda in 2004 were foodstuffs, machinery, steel, petroleum, cement, and construction material. Leading sources of Rwandan imports were Kenya (24.4 percent), Germany (7.4 percent), and Belgium (6.6 percent). In 2004, U.S. exports to Rwanda were valued at $11.1 million, and primarily were comprised of agricultural exports, business machines and equipment, and computers. The Department of Commerce did not receive any license applications for arms-related items to Rwanda in 2004.
U.S. unilateral export sanctions on Sudan have had a minor impact on U.S. industry. Sudan’s poor economic performance over the past decade has prevented the country from importing a significant amount of goods from any supplier, including the United States. Before the U.S. embargo went into effect on November 4, 1997, most of the small number of items that Sudan imported from the United States did not require an export license and, thus, were not affected by export controls. According to Census Bureau statistics, in 2004, U.S. exports to Sudan were valued at $68.3 million, and primarily consisted of agricultural exports. The CIA estimates that Sudan’s total imports from all sources were valued at $3.5 billion in 2004. Leading suppliers to Sudan were China, Saudi Arabia, the UAE, Egypt, India, Germany, Australia, and Japan. Leading imports were foodstuffs, manufactured goods, refinery and transport equipment, medicines and chemicals, textiles, and wheat.
After sanctions were imposed, the Treasury Department assumed licensing responsibility for the export and reexport of items subject to the EAR to Sudan. However, the Department of Commerce’s regulations remained in place. Therefore, exporters were required to obtain authorization to export items controlled on the CCL to Sudan from both Treasury and Commerce. Starting in November 2004, the two agencies began to process applications simultaneously to minimize shipping delays, especially for non-governmental humanitarian organizations. Previously, applicants were instructed to obtain authorization from Treasury before submitting an application to Commerce. The Department of Commerce has licensing jurisdiction for the “deemed export” of technology to Sudanese nationals. The Department of the Treasury is solely responsible for licensing the export of agricultural commodities, medical items not listed on the CCL to Sudan under the provisions of TSRA, and other items not listed on the Commerce Control List.
In support of humanitarian efforts, the Department of Commerce approved 29 license applications for Sudan in Fiscal Year 2005 valued at $20.2 million (including aircraft on temporary sojourn). During the same time, 11 applications were returned without action, with instructions for the exporter to contact the Department of the Treasury. Two applications were denied during Fiscal Year 2005.
Table 4: Approved Licenses for Sudan (FY 1992 to FY 2005)
| Fiscal Year | Number of Applications / Notifications |
Total Value in U.S. Dollars |
|---|---|---|
| 1993 | 2 | $5,404,000 |
| 1994 | 0 | $0 |
| 1995 | 0 | $0 |
| 1996 | 7 | $571,992 |
| 1997 | 10 | $7,095,973 |
| 1998 | 0 | $0 |
| 1999 | 1 | $1 |
| 2000 | 1 | $1 |
| 2001 | 0 | $0 |
| 2002 | 0 | $0 |
| 2003 | 0 | $0 |
| 2004 | 4 | $10,646,641 |
| 2005 | 29 | $20,246,720 |
| TOTAL | 54 | $43,965,328 |
In 2004, U.S. exports to Syria were valued at $213 million, and were primarily corn and soybeans. The CIA estimates that Syria's total imports from all sources were $5 billion in 2004. Leading suppliers to Syria (all with less than 10 percent of market share) were Turkey, Ukraine, China, Russia, Saudi Arabia, the United States, South Korea, and Italy. Leading Syrian imports were machinery and transport equipment, electric power machinery, food and livestock, metal and metal products, chemicals and chemical products, plastics, yarn, and paper.
Table 5: Approved Commerce Export License Applications for Syria (FY 1991-2005)
| Fiscal Year | Number of Applications / Notifications |
Total Value in U.S. Dollars |
|---|---|---|
| 1991 | 8 | $1,041,504 |
| 1992 | 31 | $46,366,527 |
| 1993 | 106 | $42,896,103 |
| 1994 | 167 | $76,379,096 |
| 1995 | 139 | $68,298,135 |
| 1996 | 80 | $81,006,877 |
| 1997 | 100 | $107,003,346 |
| 1998 | 81 | $80,707,010 |
| 1999 | 100 | $86,534,591 |
| 2000 | 121 | $141,539,669 |
| 2001 | 106 | $70,269,323 |
| 2002 | 95 | $108,101,460 |
| 2003 | 127 | $200,664,118 |
| 2004 | 100 | $246,979,100 |
| 2005 | 210 | $325,088,347 |
| TOTAL | 1,591 | $1,682,875,206 |
The SAA, as implemented by the President, prohibited the export of virtually all products of the United States with the exception of food and certain medicine. The Department of Commerce published General Order No. 2 on May 14, 2004, implementing the SAA for purposes of the EAR. In implementing the SAA, the President exercised his national security waiver authority for certain transactions. The President provided waivers for six categories of items: (1) items for the use of the U.S. Government; (2) certain medicines and medical devices; (3) parts and components intended to ensure the safety of fight for civil passenger aircraft; (4) aircraft used by the Syrian Government for its official use; (5) telecommunications equipment and associated parts and components; and (6) items for the use of the United Nations in Syria. The U.S. Government reviews applications for the export or reexport of items eligible under waivers on a case-by-case basis.
In Fiscal Year 2005, the Department of Commerce approved 210 license applications, valued at $325.1 million. The top categories of approved licenses were EAR99 medical items and telecommunications equipment. (EAR99 covers any export or reexport of any item not specified on the Commerce Control List, unless excluded in the EAR, or subject to the jurisdiction of another agency.) The Department has also returned without action 93 license applications, valued at $258.5 million, and rejected 32 license applications, valued at $158.3 million. As a result of General Order No. 2, the Department in 2004 revoked 24 previously valid licenses valued at $154.5 million. The largest single license revoked was for a temporary sojourn of aircraft for $135 million. In addition to licenses revoked and applications denied, many potential license applicants chose not to apply because no available exceptions for their commodity existed.
5. Effective Enforcement of Controls. The Secretary has determined the United States has the ability to effectively enforce these controls. Controls on exports to embargoed and sanctioned countries and persons, including those discussed in this chapter, raise a number of challenges. These include the need to concentrate limited resources on priority areas, developing new strategies to limit reexport violations, strengthening the cooperative relationship with other law enforcement agencies in the United States and overseas, and maintaining a consistent outreach effort to help limit U.S. business vulnerability. Overall, the embargoes are generally understood and supported by the U.S. public. Voluntary cooperation from most U.S. exporters is common.
There have been a number of enforcement actions regarding non-compliance with these export controls. For example, in February 2005, Erik Kyriacou, a former NBC cameraman and resident of Long Island, New York, pled guilty to a four-count indictment charging him with attempting to illegally export night vision lenses to Iran. The lenses were stolen from NBC News in New York. According to court documents, Kyriacou was attempting to sell the lenses on the Internet to undercover agents posing as international arms brokers. Kyriacou agreed to sell the lenses to the agents knowing that they were destined for shipment to Iran in violation of the U.S. embargo. In July 2005, he was sentenced to five years probation, and four months home confinement, as well as $400 special assessment and restitution. The Department of Commerce’s Office of Export Enforcement of the Bureau of Industry and Security, and the Department of Homeland Security’s Immigration and Customs Enforcement jointly conducted this investigation.
In January 2005, Nozzle Manufacturing Company, previously doing business as Monarch Nozzle, of Swedesboro, New Jersey, was sentenced to pay a $10,000 criminal fine and $400 for charges in connection with the illegal export of oil burning nozzles to Iran. Nozzle Manufacturing pled guilty to knowingly shipping oil burning nozzles to Iran in violation of the U.S. embargo. In related administrative cases, the Department of Commerce’s Bureau of Industry and Security and the Treasury Department's Office of Foreign Assets Control each assessed $10,000 administrative penalties as a part of agreements to settle charges related to the unlicensed exports. The company was dissolved after sentencing. The Department of Commerce’s Office of Export Enforcement of the Bureau of Industry and Security, and the Department of Homeland Security’s Immigration and Customs Enforcement jointly conducted the investigation of the company.
On April 1, 2005, BEF Corporation (BEF) of Allentown, Pennsylvania, was sentenced to five years probation and ordered to pay a criminal fine of $350,000, criminally forfeit an additional $150,000, and pay a civil fine of $39,000. The investigation revealed that between 2001 and 2002, BEF knowingly exported miniature photo labs to Iran without the export licenses required by the Department of the Treasury and made false statements on Shipper's Export Declarations, required export control documents, to help BEF international customers avoid import duties. BEF is a company that buys one-hour photo processing machines, refurbishes them, and resells the equipment throughout the world. In November 2004, BEF pled guilty to one count of violating the International Emergency Economic Powers Act and the Iranian Transactions Regulations. BEF also pled guilty to ten counts of making false statements to the U.S. Government. The Department of Commerce’s Office of Export Enforcement of the Bureau of Industry and Security, and the Department of Homeland Security’s Immigration and Customs Enforcement jointly conducted this investigation.
In an October 13, 2005, Federal Register notice (70 FR 59678), the Department of Commerce solicited comments from industry on the effectiveness of U.S. foreign policy-based export controls. Comments were solicited from all six of the Department’s Technical Advisory Committees, as well as from the President’s Export Council Subcommittee on Export Administration. Comments also were solicited from the public via the BIS website. The comment period closed on November 14, 2005, and four comments were received. A detailed review of all comments received can be found in Appendix I. One comment pertained to embargoed countries.
One comment expressed concern over the effect unilateral embargoes have on U.S. companies and their employees. The commentator noted that such embargoes have little effect on the target countries because these countries are easily able to obtain goods elsewhere. The commentator further noted that even if an embargo is lifted, the market for U.S. goods will continue to be disadvantaged because non-U.S. competitors have been able to build a brand preference in the country.
A detailed review of all comments can be found at Appendix I.
The U.S. Government has made reasonable efforts to achieve the purposes of the U.S. embargoes and sanctions through negotiations with other countries, through international fora, and through the United Nations, as outlined in the specific country descriptions that follow.
The Administration has worked diligently with other nations, especially countries in Europe and Latin America, to resolve disputes that arise as result of the U.S. embargo. Differences remain between the United States and other countries concerning the best method to encourage democracy and human rights. However, the European Union and others share with the United States the ultimate goal of a free, peaceful, democratic, and market-oriented Cuba.
The United States has an ongoing dialogue with its allies and partners on Iran’s activities. The United States continues to work with other states to curb Iran’s proliferation activities, especially in light of the continuing disclosures about Iran’s nuclear program. In addition, the IAEA is working to verify and monitor Iran’s nuclear program. The U.S. Government supports these efforts and has provided personnel and materials to the IAEA to facilitate the IAEA’s actions.
Prior to Operation Iraqi Freedom and the lifting of the embargo on Iraq, the United States maintained an ongoing dialogue with other United Nations member states, as well as separately, with its allies and partners. Since the lifting of the embargo, the United States has continued discussions with many other countries on both a bilateral and multilateral basis.
Most countries support international efforts to stabilize Ivory Coast and to prevent further conflict and regional instability, including through compliance with the United Nations arms embargo.
Most countries support international efforts to stabilize Rwanda and to prevent further ethnic conflict and regional instability, including through compliance with the United Nations arms embargo.
The United States continues to consult with other countries regarding the internal conflict in Sudan and the humanitarian needs of the population. Many of these consultations have occurred within the United Nations as well as the Intergovernmental Authority on Development (IGAD), which is the entity that sponsored the peace talks between the Government of Sudan, and the Sudan Peoples’ Liberation Movement/Army (SPLM/A).
The United States is in constant communication with other countries regarding the Syrian Government's policies of concern. Additionally, the United States has communicated its concerns to the Government of Syria directly and forcefully through the U.S. Embassy in Syria and the Syrian Ambassador in Washington.
Designated Terrorist Persons and GroupsThe United States cooperates with allies and partners and shares information on the activities of designated terrorist entities. It is expected that strong international support for the U.S. fight against terrorism will further facilitate dialogue on foreign export control expansion.
The U.S. Government imposes embargoes and sanctions in an effort to make a strong statement against a particular country’s policies or a person’s actions. Restrictions on exports can supplement other actions that the U.S. Government takes to change the behavior of the target countries and persons, including such actions as severing diplomatic relations, banning imports into the United States, seeking UN denunciations, and curtailing or discouraging bilateral educational, scientific, or cultural exchanges. The U.S. Government has had some success using these alternative means to reach the intended foreign policy objectives. Nonetheless, these trade sanctions remain a critical part of the U.S. Government’s foreign policy. U.S. Government embargoes and sanctions complement diplomatic measures and continue to be used to influence the behavior of these countries.
The foreign availability of items controlled under Section 6(a) has been considered by the Department of Commerce. In general, numerous foreign sources of commodities and technology similar to those subject to these controls are known, especially for items controlled by the U.S. Government. Although the embargoes and comprehensive sanctions described in this chapter are widely followed and many have significant multilateral support, the U.S. Government’s continued use of embargoes and sanctions serve foreign policy interests that override the impact of foreign availability.
1. The general policy of denial stated in the EAR is superceded by a policy of denial pursuant to the Iran-Iraq Arms Nonproliferation Act of 1992.