50 U.S.C. § 4611 — Multilateral export control violations

Page 1188 TITLE 50—WAR AND NATIONAL DEFENSE § 4611 tentional boycotting of friendly countries. See section 4842 of this title. Section 4608, Pub. L. 96–72, § 9, Sept. 29, 1979, 93 Stat. 524, related to procedures for hardship relief from ex- port controls. Section 4609, Pub. L. 96–72, § 10, Sept. 29, 1979, 93 Stat. 525; Pub. L. 99–64, title I, § 111, July 12, 1985, 99 Stat. 142; Pub. L. 100–418, title II, § 2425(a), (c), Aug. 23, 1988, 102 Stat. 1360, 1361, related to processing of export license applications. See section 4815 of this title. Section 4610, Pub. L. 96–72, § 11, Sept. 29, 1979, 93 Stat. 529; Pub. L. 97–145, § 4(a)–(c), Dec. 29, 1981, 95 Stat. 1727; Pub. L. 99–64, title I, § 112, July 12, 1985, 99 Stat. 146; Pub. L. 100–418, title II, § 2426, Aug. 23, 1988, 102 Stat. 1361, related to penalties for violations. See section 4819 of this title. Sections 4605 to 4610 were formerly classified to sec- tions 2405 to 2410, respectively, of the former Appendix to this title prior to editorial reclassification and re- numbering. Prior sections 2405 to 2410 of the former Appendix to this title expired with the expiration of Pub. L. 91–184 on Sept. 30, 1979. Section 2405, Pub. L. 91–184, § 6, Dec. 30, 1969, 83 Stat. 844; Pub. L. 95–52, title I, §§ 103(d), 112, title II, § 203(a), June 22, 1977, 91 Stat. 237, 240, 247; Pub. L. 95–223, title III, § 301(b)(2), Dec. 28, 1977, 91 Stat. 1629, set forth provi- sions respecting violations and penalties. Section 2406, Pub. L. 91–184, § 7, Dec. 30, 1969, 83 Stat. 845; Pub. L. 95–52, title I, §§ 113(a), 114, title II, § 201(c), June 22, 1977, 91 Stat. 241, 246, set forth enforcement procedures applicable to the Export Administration Act of 1969. Section 2407, Pub. L. 91–184, § 8, Dec. 30, 1969, 83 Stat. 846; Pub. L. 95–52, title II, § 203(b), June 22, 1977, 91 Stat. 247, related to exemption from administrative proce- dure and judicial review provisions. Section 2408, Pub. L. 91–184, § 9, Dec. 30, 1969, 83 Stat. 846, related to providing information to exporters. Section 2409, Pub. L. 91–184, § 10, Dec. 30, 1969, 83 Stat. 846; Pub. L. 93–500, § 3(b), Oct. 29, 1974, 88 Stat. 1552; Pub. L. 93–608, § 2(1), Jan. 2, 1975, 88 Stat. 1971; Pub. L. 95–52, title I, § 116(a), (b)(2), June 22, 1977, 91 Stat. 241, 242, set forth requirements respecting semiannual reports to President and Congress. Section 2410, Pub. L. 91–184, § 11, Dec. 30, 1969, 83 Stat. 846; Pub. L. 95–52, title II, § 204, June 22, 1977, 91 Stat. 247, defined ‘‘person’’ and ‘‘United States person’’ for purposes of the Export Administration Act of 1969. § 4611. Multilateral export control violations (a) Determination by the President The President, subject to subsection (c), shall apply sanctions under subsection (b) for a period of not less than 2 years and not more than 5 years, if the President determines that— (1) a foreign person has violated any regula- tion issued by a country to control exports for national security purposes pursuant to the agreement of the group known as the Coordi- nating Committee, and (2) such violation has resulted in substantial enhancement of Soviet and East bloc capabili- ties in submarine or antisubmarine warfare, ballistic or antiballistic missile technology, strategic aircraft, command, control, commu- nications and intelligence, or other critical technologies as determined by the President, on the advice of the National Security Coun- cil, to represent a serious adverse impact on the strategic balance of forces. The President shall notify the Congress of each action taken under this section. This section, except subsections (h) and (j), applies only to violations that occur after August 23, 1988. (b) Sanctions The sanctions referred to in subsection (a) shall apply to the foreign person committing the violation, as well as to any parent, affiliate, sub- sidiary, and successor entity of the foreign per- son, and, except as provided in subsection (c), are as follows: (1) a prohibition on contracting with, and procurement of products and services from, a sanctioned person, by any department, agency, or instrumentality of the United States Gov- ernment, and (2) a prohibition on importation into the United States of all products produced by a sanctioned person. (c) Exceptions The President shall not apply sanctions under this section— (1) in the case of procurement of defense ar- ticles or defense services— (A) under existing contracts or sub- contracts, including the exercise of options for production quantities to satisfy United States operational military requirements; (B) if the President determines that the foreign person or other entity to which the sanctions would otherwise be applied is a sole source supplier of essential defense arti- cles or services and no alternative supplier can be identified; or (C) if the President determines that such articles or services are essential to the na- tional security under defense coproduction agreements; or (2) to— (A) products or services provided under contracts or other binding agreements (as such terms are defined by the President in regulations) entered into before the date on which the President notifies the Congress of the intention to impose the sanctions; (B) spare parts; (C) component parts, but not finished products, essential to United States prod- ucts or production; (D) routine servicing and maintenance of products; or (E) information and technology. (d) Exclusion The President shall not apply sanctions under this section to a parent, affiliate, subsidiary, and successor entity of a foreign person if the President determines that— (1) the parent, affiliate, subsidiary, or suc- cessor entity (as the case may be) has not knowingly violated the export control regula- tion violated by the foreign person, and (2) the government of the country with juris- diction over the parent, affiliate, subsidiary, or successor entity had in effect, at the time of the violation by the foreign person, an ef- fective export control system consistent with principles agreed to in the Coordinating Com- mittee, including the following: (A) national laws providing appropriate civil and criminal penalties and statutes of limitations sufficient to deter potential vio- lations; (B) a program to evaluate export license applications that includes sufficient tech- Page 1189 TITLE 50—WAR AND NATIONAL DEFENSE § 4611 1 See References in Text note below. nical expertise to assess the licensing status of exports and ensure the reliability of end- users; (C) an enforcement mechanism that pro- vides authority for trained enforcement offi- cers to investigate and prevent illegal ex- ports; (D) a system of export control documenta- tion to verify the movement of goods and technology; and (E) procedures for the coordination and ex- change of information concerning violations of the agreement of the Coordinating Com- mittee. (e) Definitions For purposes of this section— (1) the term ‘‘component part’’ means any article which is not usable for its intended functions without being imbedded in or inte- grated into any other product and which, if used in production of a finished product, would be substantially transformed in that process; (2) the term ‘‘finished product’’ means any article which is usable for its intended func- tions without being imbedded or integrated into any other product, but in no case shall such term be deemed to include an article pro- duced by a person other than a sanctioned per- son that contains parts or components of the sanctioned person if the parts or components have been substantially transformed during production of the finished product; and (3) the term ‘‘sanctioned person’’ means a foreign person, and any parent, affiliate, sub- sidiary, or successor entity of the foreign per- son, upon whom sanctions have been imposed under this section. (f) Subsequent modifications of sanctions The President may, after consultation with the Congress, limit the scope of sanctions ap- plied to a parent, affiliate, subsidiary, or suc- cessor entity of the foreign person determined to have committed the violation on account of which the sanctions were imposed if the Presi- dent determines that— (1) the parent, affiliate, subsidiary, or suc- cessor entity (as the case may be) has not, on the basis of available evidence, itself violated the export control regulation involved, either directly or through a course of conduct; (2) the government with jurisdiction over the parent, affiliate, subsidiary, or successor entity has improved its export control system as measured by the criteria set forth in sub- section (d)(2); (3) the parent, affiliate, subsidiary, or suc- cessor entity, has instituted improvements in internal controls sufficient to detect and pre- vent violations of the export control regime implemented under paragraph (2); and (4) the impact of the sanctions imposed on the parent, affiliate, subsidiary, or successor entity is proportionate to the increased de- fense expenditures imposed on the United States. Notwithstanding the preceding sentence, the President may not limit the scope of the sanc- tion referred to in subsection (b)(1) with respect to the parent of the foreign person determined to have committed the violation, until that sanction has been in effect for at least 2 years. (g) Reports to Congress The President shall include in the annual re- port submitted under section 4616 1 of this title, a report on the status of any sanctions imposed under this section, including any exceptions, ex- clusions, or modifications of sanctions that have been applied under subsection (c), (d), or (f). (h) Discretionary imposition of sanctions If the President determines that a foreign per- son has violated a regulation issued by a coun- try to control exports for national security pur- poses pursuant to the agreement of the group known as the Coordinating Committee, but in a case in which subsection (a)(2) may not apply, the President may apply the sanctions referred to in subsection (b) against that foreign person for a period of not more than 5 years. (i) Compensation for diversion of militarily crit- ical technologies to controlled countries (1) In cases in which sanctions have been ap- plied against a foreign person under subsection (a), the President shall initiate discussions with the foreign person and the government with ju- risdiction over that foreign person regarding compensation on the part of the foreign person in an amount proportionate to the costs of re- search and development and procurement of new defensive systems by the United States and the allies of the United States to counteract the ef- fect of the technological advance achieved by the Soviet Union as a result of the violation by that foreign person. (2) The President shall, at the time that dis- cussions are initiated under paragraph (1), re- port to the Congress that such discussions are being undertaken, and shall report to the Con- gress the outcome of those discussions. (j) Other actions by the President Upon making a determination under sub- section (a) or (h), the President shall— (1) initiate consultations with the foreign government with jurisdiction over the foreign person who committed the violation involved, in order to seek prompt remedial action by that government; (2) initiate discussions with the governments participating in the Coordinating Committee regarding the violation and means to ensure that similar violations do not occur; and (3) consult with and report to the Congress on the nature of the violation and the actions the President proposes to take, or has taken, to rectify the situation. (k) Damages for certain violations (1) In any case in which the President makes a determination under subsection (a), the Sec- retary of Defense shall determine the costs of restoring the military preparedness of the United States on account of the violation in- volved. The Secretary of Defense shall notify the Attorney General of his determination, and the Attorney General may bring an action for damages, in any appropriate district court of the United States, to recover such costs against Page 1190 TITLE 50—WAR AND NATIONAL DEFENSE § 4612 2 So in original. Subsec. (k) was enacted without a par. (2). 1 See References in Text note below. the person who committed the violation, any person that is owned or controlled by the person who committed the violation, and any person who owns and controls the person who com- mitted the violation. (3) 2 The total amount awarded in any case brought under paragraph (2) 2 shall be deter- mined by the court in light of the facts and cir- cumstances, but shall not exceed the amount of the net loss to the national security of the United States. An action under this subsection shall be commenced not later than 3 years after the violation occurs, or one year after the viola- tion is discovered, whichever is later. (l) Definition For purposes of this section, the term ‘‘foreign person’’ means any person other than a United States person. (Pub. L. 96–72, § 11A, as added Pub. L. 100–418, title II, § 2444, Aug. 23, 1988, 102 Stat. 1366.) Editorial Notes REFERENCES IN TEXT Section 4616 of this title, referred to in subsec. (g), was repealed by Pub. L. 115–232, div. A, title XVII, § 1766(a), Aug. 13, 2018, 132 Stat. 2232. CODIFICATION Section was formerly classified to section 2410a of the former Appendix to this title prior to editorial reclassi- fication and renumbering as this section. Statutory Notes and Related Subsidiaries SHORT TITLE Pub. L. 100–418, title II, § 2441, Aug. 23, 1988, 102 Stat. 1364, provided that: ‘‘This part [part II (§§ 2441–2447) of subtitle D of title II of Pub. L. 100–418, enacting this section, amending former sections 4604 and 4616 of this title and section 1864 of Title 19, Customs Duties, and enacting provisions formerly set out as notes under section 2410a of the former Appendix to this title] may be cited as the ‘Multilateral Export Control Enhance- ment Amendments Act’.’’ § 4612. Missile proliferation control violations (a) Violations by United States persons (1) Sanctions (A) If the President determines that a United States person knowingly— (i) exports, transfers, or otherwise engages in the trade of any item on the MTCR Annex, in violation of the provisions of sec- tion 38 (22 U.S.C. 2778) or chapter 7 of the Arms Export Control Act [22 U.S.C. 2797 et seq.], section 4604 or 4605 1 of this title, or any regulations or orders issued under any such provisions, (ii) conspires to or attempts to engage in such export, transfer, or trade, or (iii) facilitates such export, transfer, or trade by any other person, then the President shall impose the applicable sanctions described in subparagraph (B). (B) The sanctions which apply to a United States person under subparagraph (A) are the following: (i) If the item on the MTCR Annex in- volved in the export, transfer, or trade is missile equipment or technology within cat- egory II of the MTCR Annex, then the Presi- dent shall deny to such United States per- son, for a period of 2 years, licenses for the transfer of missile equipment or technology controlled under this chapter. (ii) If the item on the MTCR Annex in- volved in the export, transfer, or trade is missile equipment or technology within cat- egory I of the MTCR Annex, then the Presi- dent shall deny to such United States per- son, for a period of not less than 2 years, all licenses for items the export of which is con- trolled under this chapter. (2) Discretionary sanctions In the case of any determination referred to in paragraph (1), the Secretary may pursue any other appropriate penalties under section 4610 1 of this title. (3) Waiver The President may waive the imposition of sanctions under paragraph (1) on a person with respect to a product or service if the President certifies to the Congress that— (A) the product or service is essential to the national security of the United States; and (B) such person is a sole source supplier of the product or service, the product or serv- ice is not available from any alternative re- liable supplier, and the need for the product or service cannot be met in a timely manner by improved manufacturing processes or technological developments. (b) Transfers of missile equipment or technology by foreign persons (1) Sanctions (A) Subject to paragraphs (3) through (7), if the President determines that a foreign per- son, after November 5, 1990, knowingly— (i) exports, transfers, or otherwise engages in the trade of any MTCR equipment or technology that contributes to the design, development, or production of missiles in a country that is not an MTCR adherent and would be, if it were United States-origin equipment or technology, subject to the ju- risdiction of the United States under this chapter, (ii) conspires to or attempts to engage in such export, transfer, or trade, or (iii) facilitates such export, transfer, or trade by any other person, or if the President has made a determination with respect to a foreign person under section 73(a) of the Arms Export Control Act [22 U.S.C. 2797b(a)], then the President shall impose on that foreign person the applicable sanctions under subparagraph (B). (B) The sanctions which apply to a foreign person under subparagraph (A) are the fol- lowing: (i) If the item involved in the export, transfer, or trade is within category II of the MTCR Annex, then the President shall deny, for a period of 2 years, licenses for the trans-