International Trade Law News

The Law Commission of the United Kingdom, a non-political independent body established in 1965 to review and recommend reform where it is needed, recently issued a report entitled Reforming Bribery, that recommends significant changes to U.K.'s anti-bribery laws.

The Law Commission's report, which calls the current anti-bribery laws "out-dated" and "unfit", proposes that the U.K.'s numerous anti-bribery laws currently in place be repealed and replaced with two general offenses of Bribery, one concerned with the conduct of persons that pay bribes and one concerned with the recipient of the bribes. These offenses would be confined to activity of a business, professional or public nature.

In addition, the Law Commission also recommends the following two new anti-bribery offenses:

1. Bribery of a foreign public official; and

2. Corporate offense of negligently failing to prevent bribery by an employee or agent. It would be a defense to this crime that the company had adequate systems in place to prevent bribery.

The Law Commission also recommends extending the anti-bribery laws to cover foreign nationals who reside in the U.K. and conduct their business there.

The full version of Law Commission's final report can be found here.

Labels: FCPA, United Kingdom

The Financial Times newspaper reports that the Aerospace Industries Association (AIA) recently sent a letter to Senate Foreign Relations Chairman Joe Biden criticizing the Senate's decision to delay consideration of the bilateral defense trade cooperation treaty between the U.S. and the U.K.

According to the story, the AIA's letter indicated that failure to approve the treaty this year "would be an unfortunate setback in ongoing efforts to shape an export control regime that will serve America's interests in the 21st century".

The leadership of the Senate Foreign Relations Committee has claimed that their decision to delay approval of the U.K. and Australia bilateral defense trade cooperation treaties stemmed from their belief that they lacked the necessary time to evaluate the Directorate of Defense Trade Controls' proposed amendments to the ITAR that are necessary to put the treaties into effect.

Labels: Export Controls, ITAR, United Kingdom

The Senate Foreign Relations Committee has indicated that it will wait until the next session of Congress before considering the Defense Trade Cooperation treaties with the U.K. and Australia that were signed in 2007.

The Aerospace Industries Association reacted to this news by issuing the following statement:

We are very disappointed that Congress has deferred approval of the U.S.-UK and U.S.-Australian Defense Trade Cooperation Treaties. We had been optimistic that they would be approved and signed by the president this session, despite the press of last minute business acing the Senate. Even with this setback, we are encouraged by progress this year in export control modernization. The administration's package of proposals released in January, along with the rule clarifying export control treatment for civil aircraft components in August, are significant steps forward in achieving a system that is predictable, efficient and transparent. It is critical to our nation's security and economic prosperity to continue with modernization efforts in the next administration and Congress, to include passage and implementing these treaties.

The full text of the U.S.-U.K. Defense Trade Cooperation treaty can be found here. The full text of the U.S.-Australia Defense Trade Cooperation treaty can be found here. The implementing arrangements for these treaties that were signed earlier this year can be found here (U.K) and here (Australia).

Labels: Australia, DDTC, United Kingdom

In a story about U.S.-U.K. relations, the current edition of The Economist contains a list of "imbalances" in the areas of trade, justice and defense. Not surprisingly, issues relating to the extraterritorial application of U.S. economic sanctions and U.S. defense export controls were included in the list of five things that need to be fixed. Here is the complete list in the order presented in the article:

"Extradition treaty—A new extradition treaty signed between America and Britain in 2003 is seen as unfair because it has made it easier for America to extradite criminal suspects from Britain (with low requirements for evidence) than it is the other way round.

Internet gambling—America has closed its domestic gambling market to foreign (mainly British) internet betting companies despite clear rulings by the World Trade Organisation that the move is discriminatory.

Extraterritorial laws—Legislation such as the Helms-Burton Act and Patriot Act extends the reach of American law to other parts of the world, impeding trade and raising the risk that foreign firms and citizens may face prosecution in America for doing things that are legal in their home countries.

Investment barriers—America’s domestic air travel market is closed to foreign airlines, whereas American firms have full access to Europe’s.

Defence—British defence firms and its military worry that American efforts to close its markets and to limit exports of sensitive military technology do not take account of historical ties and will undermine further co-operation."

Labels: Export Controls, Sanctions, United Kingdom

The U.K. Government has published its 11th annual Strategic Export Controls report for the 2007 calendar year.

In addition to describing various changes to U.K. export controls policies during the past year, the report indicates that in 2007 the U.K. processed 9,647 Standard Individual Export Licence (SIEL) applications, down from 9,908 in 2006. Of these, over 79% were processed within 20 working days. In addition, a total of 292 Open Individual Export Licence (OIEL) applications were processed, with 75% being processed within the 60-day target.

What is striking about the report is the continued small number of enforcement cases brought involving violations of the U.K.'s export control laws. While the report states that the "enforcement of strategic export controls on military and dual-use goods, including activities against trafficking and brokering, continues to be a high priority", the report indicates that enforcement actions resulted in 55 seizures and only three successful prosecutions involving violations of export control laws and seized. This was the same number of successful prosecutions brought in 2006. See table 1.2 of the report for a complete list of the export prosecutions in the past two years.

Labels: Export Controls, United Kingdom

The Senate Committee on Foreign Relations will hold a hearing on May 21, 2008 on the Defense Trade Cooperation treaties that the U.S. signed with the governments of the United Kingdom and Australia in 2007 and were submitted to the Senate for "advice and consent" (2/3 vote required for approval) prior to ratification by the parties.

The Defense Trade Cooperation treaties are intended to ease restrictions associated with the International Trade in Arms Regulations (ITAR) by creating a comprehensive framework within which most defense trade can be carried out under streamlined procedures.

So far, the only witness appearing at the hearing will be Jon C. Rood, Acting Under Secretary of State for Arms Control and International Security Affairs.

The hearing will be held at 9:15 A.M. in room 419 of the Dirksen Senate Office Building.

The full text of the U.S.-U.K. Defense Trade Cooperation treaty can be found here. The full text of the U.S.-Australia Defense Trade Cooperation treaty can be found here. The implementing arrangements for these treaties that were signed earlier this year can be found here (U.K) and here (Australia).

Labels: Australia, DDTC, United Kingdom

The U.K. Government today published its 2006 Annual Report on Strategic Export Controls. The report contains an overview of U.K. policy and international developments in export control regimes and includes information on U.K. licensing decisions made during 2006.

With respect to licensing, the report states that in 2006, the U.K. processed 9,908 Standard Individual Export License (SIELs) applications, an increase from the 9,062 SIELs processed in 2005. Of these over 82% were processed within 20 working days. During the same period a total of 584 Open Individual Export Licence (OIELs) applications were processed, 74% of which were processed within 60 days.

The report also contains information on export enforcement activity in the U.K. The report shows a reduction in the number of cases of strategic goods seized by Her Majesty's Revenue and Customs (HMRC) in the reporting period. The report also lists the monetary penalties imposed by HMRC for violations of U.K.'s export control laws. In fiscal year 2006-2007, the report shows that the U.K. imposed monetary penalties on only two entities for exporting military goods to Kuwait and Iraq. The total amount of penalties assessed on the two companies was only £18,000 (approximately US$36,000). (By contrast, the U.S. Bureau of Industry and Security's (BIS) 2006 Annual Report states that BIS brought 104 administrative cases and imposed US$13.1 million in civil penalties for violations of U.S. export control laws.)

The PDF version of the 2006 Annual Report and accompanying annex can be found on the website of the U.K. Government's Foreign and Commonwealth Office.

Labels: Export Controls, United Kingdom

The U.K.'s Department of Trade and Industry (DTI) announced today that it is conducting a Post Implementation Review of the U.K.'s export control legislation that was enacted in 2004 under the Export Control Act 2002. The review is intended to determine:

• Whether these new controls achieved their desired effect;
• Whether the resulting impact upon business was proportionate and at an acceptable level; and
  
• Whether any unintended or undesirable consequences – commercial or otherwise - have resulted

In addition, the DTI has issued several proposed changes to the U.K.'s export control regime and is seeking input on these proposals, including whether:

• Trading by U.K. persons overseas should require a U.K. licence for a broader range of equipment than at present, including small arms and light weapons and providers of "ancillary services", such as transportation;
• Tighter control should be applied to the production agreements under which U.K. companies use overseas companies or their own overseas subsidiaries to produce military equipment on their behalf for onward supply;
• Whether the Military End-Use Control --under which goods which are not normally licensed can be deemed licenseable when exported for incorporation into military equipment which will be used in an embargoed destination -- should be extended to cover equipment that is complete when it leaves the U.K. and to destinations that are not subject to embargoes;
• A pre-licensing registration system for U.K.-based arms traders should be introduced.
  

The DTI has issued a document containing these proposals and a detailed questionnaire for respondents to give their views and provide their input on these issues. Responses to the questionnaire are due on September 30, 2007 and the DTI intends to issue its own internal analysis by the end of this year.

Labels: Export Controls, United Kingdom