50 U.S.C. § 4611: Multilateral export control…

Summary

The President must impose sanctions for at least 2 years and up to 5 years when a non‑U.S. person breaks export control rules used by countries in the Coordinating Committee and that break gives the Soviet or East bloc a major boost in big military technologies (like submarines, missiles, strategic aircraft, command and control, or other critical tech) that the President, after advice, says seriously hurts the strategic balance. The President must tell Congress when sanctions are used. Sanctions apply to the person who broke the rules and to its parent, affiliates, subsidiaries, and successors. The main penalties ban U.S. government agencies from contracting with the sanctioned person and ban importing products made by that person. The President must not apply sanctions in certain cases, such as existing defense contracts, sole source suppliers needed for U.S. forces, defense coproduction, contracts made before the President’s notice, spare parts, component parts (but not finished products), routine servicing, or information and technology. The President can exclude a parent or related company if it did not knowingly break the rule and its home government had an effective export control system (laws, licensing review, enforcement, tracking paperwork, and information sharing). The President can narrow sanctions later if the related company and its government fix problems, but the contract ban for a parent cannot be cut back until it has been in place for at least 2 years. If a violation is found but the serious‑harm test does not apply, the President may still impose sanctions for up to 5 years. The President must start talks with the violator and its government to seek compensation that matches U.S. and allied costs to offset the harm, and must report to Congress when talks start and what comes of them. The President must consult with the violator’s government and with other Coordinating Committee members and tell Congress what is being done. The Secretary of Defense will calculate costs to restore U.S. military readiness after a finding, and the Attorney General may sue the violator and related entities to recover those costs; any suit must start within 3 years of the violation or within 1 year of learning about it, whichever is later, and awards cannot exceed the net loss to U.S. national security. Definitions used: “component part” = part that must be built into something else; “finished product” = usable item on its own; “sanctioned person” = the person on whom sanctions are imposed; “foreign person” = anyone who is not a U.S. person.

Title 50, §4611

War and National Defense, Source: USLM XML via OLRC

(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 regulation issued by a country to control exports for national security purposes pursuant to the agreement of the group known as the Coordinating Committee, and

(2)such violation has resulted in substantial enhancement of Soviet and East bloc capabilities in submarine or antisubmarine warfare, ballistic or antiballistic missile technology, strategic aircraft, command, control, communications and intelligence, or other critical technologies as determined by the President, on the advice of the National Security Council, 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, subsidiary, and successor entity of the foreign person, 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 Government, 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)

(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 products 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 successor entity (as the case may be) has not knowingly violated the export control regulation violated by the foreign person, and

(2)the government of the country with jurisdiction over the parent, affiliate, subsidiary, or successor entity had in effect, at the time of the violation by the foreign person, an effective export control system consistent with principles agreed to in the Coordinating Committee, including the following:

(A)national laws providing appropriate civil and criminal penalties and statutes of limitations sufficient to deter potential violations;

(B)a program to evaluate export license applications that includes sufficient technical expertise to assess the licensing status of exports and ensure the reliability of end-users;

(C)an enforcement mechanism that provides authority for trained enforcement officers to investigate and prevent illegal exports;

(D)a system of export control documentation to verify the movement of goods and technology; and

(E)procedures for the coordination and exchange of information concerning violations of the agreement of the Coordinating Committee.

(e)Definitions

For purposes of this section

(1)

(2)the term “finished product” means any article which is usable for its intended functions without being imbedded or integrated into any other product, but in no case shall such term be deemed to include an article produced by a person other than a sanctioned person 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, subsidiary, or successor entity of the foreign person, 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 applied to a parent, affiliate, subsidiary, or successor entity of the foreign person determined to have committed the violation on account of which the sanctions were imposed if the President determines that—

(1)the parent, affiliate, subsidiary, or successor 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 subsection (d)(2);

(3)the parent, affiliate, subsidiary, or successor entity, has instituted improvements in internal controls sufficient to detect and prevent 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 defense expenditures imposed on the United States.

Notwithstanding the preceding sentence, the President may not limit the scope of the sanction 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 report submitted under section 4616 of this title, a report on the status of any sanctions imposed under this section, including any exceptions, exclusions, 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 person has violated a regulation issued by a country to control exports for national security purposes 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 critical technologies to controlled countries

(1)In cases in which sanctions have been applied against a foreign person under subsection (a), the President shall initiate discussions with the foreign person and the government with jurisdiction over that foreign person regarding compensation on the part of the foreign person in an amount proportionate to the costs of research and development and procurement of new defensive systems by the United States and the allies of the United States to counteract the effect 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 discussions are initiated under paragraph (1), report to the Congress that such discussions are being undertaken, and shall report to the Congress the outcome of those discussions.

(j)Other actions by the President

Upon making a determination under subsection (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 Secretary of Defense shall determine the costs of restoring the military preparedness of the United States on account of the violation involved. 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 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 committed the violation.

(3)The total amount awarded in any case brought under paragraph (2) shall be determined by the court in light of the facts and circumstances, 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 violation 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.

Notes & Related Subsidiaries

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 reclassification 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 section 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 Enhancement

Amendments

Act’.”

§4611 Multilateral Export Control Violations