The Department of Commerce’s Bureau of Industry and Security (“BIS”) recently published a final rule adding to existing U.S. government restrictions on trade with Venezuela. The November 7th rule amends Section 744.21 of Commerce’s Export Administration Regulations (“EAR”) to add license requirements on the export, reexport, and transfer of certain items destined for “military end use” or a “military end user” in Venezuela. These items may include dual-use telecommunication equipment, certain software, aircraft navigation systems and lasers. Section 744.21 restrictions originally applied only to China and were extended to cover Russia about a month ago. These latest restrictions on trade with Venezuela come as a response to Venezuelan government and military reactions to domestic protests that began in February 2014. According to BIS the Venezuelan anti-democratic crackdown included “direct violence against protesters, detentions of protesters and political leaders, and acts of intimidation, resulting in numerous deaths and injuries.” The BIS action follows the imposition of visa restrictions on Venezuelan government officials last July and complements an arms embargo imposed on Venezuela by the State Department’s Directorate of Defense Trade Controls (“DDTC”) in August of 2006. Additionally, a select number of former and current Venezuelan government officials have been listed on the Office of Foreign Assets Control’s Specially Designated Nationals (“SDN”) List in past years and as a result, have had their assets frozen and are unable to transact with US persons.
Despite this recent ramp up, keep in mind that there is still not a complete embargo on trade in place against Venezuela – many non-defense related exports are still fair game. So if you are exporting to Venezuela or thinking about it, here is a list of some steps you can take to avoid breaching current trade regulation when transacting with your Venezuelan trade partners:
- Check DDTC’s U.S. Munitions List to make sure that your export item is not included on the list as there is a complete embargo on such items (and any services related to them).
- Check BIS’s Commerce Control List to see if there are any general license requirements that apply to your item’s ECCN.
- Check Supplement 2 to Section 744 of the EAR to make sure the item does not require an export license under the new restrictions imposed by Section 744.21 as of November 7, 2014. If they are listed in Supplement 2, they require an export license if they are intended for “military end use” or a “military end user.” (Note: 600 Series items cannot be exported to Venezuela without a license.)
- Run the names and aliases of all parties involved in the transactions against OFAC’s SDN List to make sure they are not listed (for a more thorough check, online screening tools that run party names against all U.S. government lists are available).
- Perform thorough anti-corruption due diligence on all parties involved in the transaction in accordance with your company’s compliance program, including obtaining anti-corruption policy certifications and completed questionnaires from your business partners and following up on any red flags.