Legal Analyses written by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.

Legal Analyses written by Mike Meier, Attorney at Law. Copyright 2017 Mike Meier. www.internationallawinfo.com.

1997 International Law Update, Volume 3, Number 1 (January).

AVIATION

United Kingdom amends Civil Aviation Act of 1982 to authorize domestic prosecution of certain crimes committed in foreign aircraft during flight to U.K. destinations

Effective July 18, 1996, the United Kingdom has amended its Section 92 of its 1982 Civil Aviation Act to provide its courts with jurisdiction to prosecute certain offenses committed in foreign aircraft in flight.  There are three basic conditions required.  First, the act or omission must be criminal if it takes place on U.K. territory.  Second, the U.K. has to be the next landing for the foreign aircraft on which the offense happens. Finally, there is a "dual criminality" element in that the act or omission must also amount to a crime if committed on the territory of the foreign nation in which the aircraft is registered.

According to the Amendment, the Crown Court is to accept the prosecutions's allegations as to dual criminality unless the defense timely objects and demands that the prosecution prove that the act or omission does violate the criminal law of the foreign nation in question.  The judge alone is to rule on this question.  The term "aircraft" does not include military planes of the U.K. or any other nation or those aircraft owned or exclusively operated by the Crown.

Citation: Civil Aviation (Amendment) Act 1996 (c 39) (United Kingdom).

ECONOMIC SANCTIONS

EU takes further action against Helms-Burton Act as well as Iran and Libya Sanctions Act; adopts position paper on Cuba policy to improve relations with U.S.; has WTO convene dispute panel to examine Act's compatibility with GATT 1994 and GATS

The EU Council has issued a regulation intended to counter the effects of the U.S. Helms-Burton Act [Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996, Pub.L. No. 104-114 (March 12, 1996), H.R. 927, 110 Stat. 785] as well as the Iran and Libya Sanctions Act [see 1996 Int'l L. Update 143].  In Article 1, the regulation "provides protection against and counteracts the extra-territorial application" of the above laws.  If these U.S. laws affect the interests of an EU person, that person must inform the EC Commission (Article 2).  No EU person is to comply with any requirement or prohibition deriving from those U.S. laws (Article 5).

Most importantly, the regulation provides that "[n]o judgment of a court or tribunal and no decision of an administrative authority located outside the Community giving effect ... to the [above] laws ... shall be recognized or be enforceable in any manner." (Article 4).  Moreover, a person affected by those U.S. statutes may recover any damages from the "entity causing the damages or from any person acting on its behalf ..." (Article 6).  Such litigation has to conform to the Brussels Convention of 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters [29 I.L.M. 1413 (1990)].

The EU Council of Ministers, however, has taken some conciliatory action that might improve relations with the U.S.  On December 2, 1996, it approved a "common position" designed to foster human rights in Cuba and critically to evaluate Cuba's internal and foreign policies [96/697/CFSP, Common Position of 2 December 1996, 1996 O.J. of the European Communities (L 322) 1, 12 December 1996].

In a related matter, on November 20, 1996, the World Trade Organization (WTO) established a dispute settlement panel to review the EU complaint that Helms-Burton's restrictions on Cuban goods and the possible refusal of U.S. visas are inconsistent with the U.S.'s obligations under the WTO Agreement (Case WT/DS38/2).  According to the complaint, the Act violates GATT Articles I, III, V, XI, and XIII, as well as GATS Articles I, III, VI, XVI and XVII.  Even if the Act does not violate specific requirements, the EU alleges that the Act "nullifies or impairs" its expected benefits under GATT 1994 and GATS, thus thwarting GATT 1994's objectives.

Citation:  Council regulation (EC) no 2271/96 of 22 November 1996 protecting against the extra-territorial application of legislation adopted by a third country ..., 1996 O.J. of the European Communities (L 309) 1, 29 November 1996; European Union News press release No. 72/96 (December 3, 1996); EU to Adopt Paper on Cuba in Move to Heal U.S. Rift, 1996 Wall St.J. Eur. 2 (November 29, 1996).

FOREIGN SOVEREIGN IMMUNITY

In damage suit against Libya by survivors of Pan Am 103 bombing, Second Circuit affirms lack of subject matter jurisdiction under FSIA

The representatives of two victims of the 1988 Pan Am 103 bombing over Lockerbie, Scotland, and a group of former Pan Am employees, sued Libya and various Libyan government entities for damages, charging that the bombers were two Libyan government agents.  The district court dismissed the case for lack of subject matter jurisdiction, and this interlocutory appeal followed. 

The U.S. Court of Appeals for the Second Circuit affirms.  The Foreign Sovereign Immunities Act of 1976 governs questions of whether the federal courts have power to entertain such a suit against Libya [28 U.S.C. §§ 1602-1611 (1994)].  In Kadic v. Karadzic, 70 F.3d 232, 1995 Int'l L. Update 5 (December) (2d Cir. 1995), the Court held that a civil suit brought in a U.S. district court against private citizens under the Alien Tort Claims Act, 28 U.S.C. § 1350 (1994), can redress injuries caused by violations of certain fundamental norms of international law.  In this appeal, the issue is whether victims can bring suit for such violations against a foreign state.

The Court rejects all four bases that the appellants allege for jurisdiction over Libya.

- Implied waiver for "ius cogens" violations:  Section 1605(a)(1) of the FSIA provides for "waive[r] ... by implication."  Congress, however, could not have intended that to mean that the mere existence of a state renders it amenable to suit merely because the world community universally condemns such behavior.  The few examples of implied waiver mentioned in the legislative history (H.R. Rep. No. 94-1487, 1976 U.S.C.C.A.N. 6604), include (1) agreeing to foreign arbitration, (2) agreeing to apply foreign law to contract interpretation, and (3) filing a responsive pleading without asserting an immunity defense.  All of these "share a close relationship to the litigation process."  Congress specifically tailored its recent amendment to FSIA (see below) to certain acts of terrorism by designated terroristic nations already banned by international conventions.  Therefore, Congress did not intend in 1976 that commission of any or all ius cogens violations would constitute an implied waiver under FSIA.

- Implied waiver from alleged guaranty of damages judgment:  A Libyan government official sent a letter to the Secretary-General of the United Nations offering to guarantee payment of compensation should a suitable tribunal render a civil judgment against the alleged bombers.  But this did not amount to a waiver of Libya's immunity from suit in the U.S. to enforce such an obligation.  Nor did it bear such a close relationship to litigation as to support an implied waiver theory.

- Occurrence on "territory" of the U.S.:  Section 1605(a)(5) of the FSIA provides an exception where the tortious act or omission of the foreign state caused injury in the U.S.  For certain limited purposes, courts have generally considered U.S. flag vessels part of U.S. "territory."  The fact that the Supreme Court considers its vessels on the high seas subject to certain assertions of U.S. authority does not necessarily mean that the ship constitutes the "territory" of the U.S. for FSIA purposes.

- Conflict with UN Charter:  The FSIA makes a foreign state's immunity subject to existing international agreements to which the U.S. belonged in 1976, the time of FSIA's enactment (§ 1604).  The appellants argue that Security Council Resolution 748 requires Libya to compensate the Pan Am 103 victims.  This raises the difficult constitutional question of whether Congress could delegate to an international organization the dynamic authority to regulate the jurisdiction of U.S. courts.  The Court holds, however, that UN action after enactment of the FSIA cannot remove immunity. 

The Court does point out that congress recently amended the FSIA.  This change allows suits against foreign states in some circumstances, e.g., for acts in violation of specific international conventions such as those banning aircraft sabotage.  See Antiterrorism and Effective Death Penalty Act of 1996, Pub.L. No. 104-132, § 221(a), 110 Stat. 1214, 1241 (1996) [to be codified as 28 U.S.C. § 1605(a)(7).] [See also 1996 Int'l L. Update 111]  The Court does not decide whether the amendment will provide a remedy in this case, leaving that to be determined further on in this litigation.

Citation:  Smith v. Socialist People's Libyan Arab Jamahiriya, No. 95-7930 (2d Cir. November 26, 1996, as amended December 11, 1996).

HAGUE SERVICE CONVENTION

Kansas District Court rules (1) that plaintiff's registered mail service on defendant's Japanese headquarters failed to comply with Hague Service Convention and (2) that service upon Kansas Secretary of State did not comply with Schlunk principle

Ann Brand, the wife of Thomas J. Brand, died in an accident in which her 1991 Mazda Protege collided with another car at an intersection.  As representative of Ann's estate, Thomas J. Brand (Brand) brought a Kansas products liability action against Mazda Motor of America, Inc. (MMA), Mazda Motor Corporation (MC), Togo Kogyo Co., Ltd. (TKC) and Mazda (North America) Inc.  He alleged that the car was not crashworthy and had a defective seat belt.  Defendants thereupon removed the case to federal court.  MC and TKC, that Brand admits are one and the same entity, moved to dismiss or to quash service as to them.  MC alleges that it is a Japanese corporation with its principal place of business in that country.

Brand had served MC by two methods for which he produced receipts.  First, he sent the complaint and summons by registered mail to MC in Hiroshima and second, he had an alias summons issued which the Kansas Secretary of State also sent by registered mail to MC's Hiroshima office.  MC pointed out, however, that the U.S. and Japan are parties to the Hague Service Convention of 1965, 28 U.S.T. 361, TIAS 6638, and that Brand had failed to comply with the Convention (1) because he had not served the designated Japanese Central Authority and (2) because he had failed to have the documents translated into Japanese.  Brand conceded that his service on MC had not complied with the Hague Convention but that his service on MC's subsidiaries, MMA and MNA, plus the Secretary of State was adequate service upon MC.

The District Court disagrees.  The Court sees nothing in the record to show that Brand had served the local subsidiaries as U.S. agents of MC which Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 707 (1988) would probably permit here without resort to the Convention.  On the contrary, when Brand chose to transmit the complaint and summons abroad, he triggered a duty to obey Convention procedures. 

To the extent that Brand relied on Article 10(a) of the Convention as authorizing transmittal by mail, the Court follows that line of cases that interpret the Article's use of the term "send" rather than "serve" as making it inapplicable to service of process abroad by registered mail.  Moreover, since Brand failed to make a prima facie showing that MC was "doing business" in Kansas, he cannot rely on the alias summons statute.  In an important dictum, the Court suggests that the making of such a showing would have brought service upon the Secretary of State within the rule of Schlunk, thus dispensing Brand from Convention requirements.  The Court grants Brand a period of time within which to achieve proper service.

Citation:  Brand v. Mazda Motors of America, Inc., 920 F. Supp. 1169 (D. Kan. 1996).

IMMIGRATION

U.S. Supreme Court holds that, in determining whether to discretionarily waive deportation based on entry fraud, INS is free to consider alien's pattern of other fraudulent activity

Yueh-Shaio Yang (respondent) and his wife, Hai-Hsia, were born and got married in the People's Republic of China.  Sometime after they had taken up residence in Taiwan, they concocted the following plan to gain entry into the U.S.  Hai-Hsia divorced respondent and came to the U.S. in 1978.  With respondent's funds, she got herself a phoney birth certificate and passport in the name of "Mary Wong," a U.S. citizen.  She then remarried respondent in Taiwan under her new identity.  Respondent then fraudulently got hold of an immigrant visa to enter the U.S. as a citizen's spouse.

In 1982, respondent applied for naturalization, falsely claiming that his wife "Mary" was a native-born American citizen and that the U.S. had lawfully admitted him as a permanent resident.  Respondent then divorced "Mary" again in 1985 so that she could get a visa under her real name as a relative of a daughter who had U.S. citizenship. 

The INS  found out about respondent's unlawful entry and in 1992 issued an order to show cause why it should not have him deported as excludable at the time of entry.  Conceding deportability, respondent asked for a waiver of deportation under 8 U.S.C. §1251(a)(1)(H).  The Immigration Judge denied the request and the Board of Immigration Appeals affirmed as a matter of discretion based in part on respondent's fraudulent behavior other than his own fraudulent entry, e.g., the two sham divorces and his own application for naturalization.  The Ninth Circuit reversed and remanded, however, holding that the BIA had abused its discretion by taking into account that respondent had taken part in his wife's fraudulent entry. [See 8 F.3d 452]

The Supreme Court granted certiorari and unanimously reverses the Ninth Circuit.  In Justice Antonin Scalia's opinion for the Court, it held that the statute allows the INS as delegate of the Attorney-General to take into account any acts of fraud the (otherwise eligible) alien may have committed in connection with his entry into the U.S.  The INS's regular policy of disregarding fraudulent entry, no matter how outrageous, is its own invention and not an approach demanded by the above statute on discretionary waiver.

Moreover, the INS has not arbitrarily disregarded its settled policy.  Rather, it has adopted a narrow perspective on what constitutes "entry fraud" as it is free to do.  "It is assuredly rational, and therefore lawful, for [the Attorney-General] to distinguish aliens such as respondent who engage in a pattern of immigration fraud from aliens who commit a single, isolated act of misrepresentation." [4011]

Citation: Immigration and Naturalization Service v. Yueh-Shaio Yang, 117 S.Ct 350, 65 U.S.L.W. 4009 (1996).

JURISDICTION, PERSONAL

Seventh Circuit finds personal jurisdiction over Japanese company in Wisconsin based on faxed communications and one personal meeting

In Spring 1994, Mid-America Tablewares (Wisconsin) ordered "Harvest Festival" dinnerware from Mogi Trading Co., Ltd. (Japan).  Most communications were by FAX, and one personal meeting took place in Wisconsin.  After Mogi shipped the dinnerware, the U.S. Food and Drug Administration (FDA) found that the dinnerware exceeded FDA regulatory guidance levels for leachable lead.  Mid-America sued for breach of warranty.  At trial, Mogi stipulated to the warranty breach, leaving the amount of damages the only remaining issue.  The jury awarded Mid-America more than $3,000,000. On appeal, Mogi challenges, inter alia, the denial of its motion to dismiss for lack of personal jurisdiction.

The U.S. Court of Appeals for the Seventh Circuit affirms in part and reverses in part.  It finds that there was personal jurisdiction over Mogi based on the Wisconsin long-arm statute.  It authorizes jurisdiction in an action that "[r]elates to goods, documents of title, and other things of value actually received by the plaintiff in this state from the defendant without regard to where delivery to carrier occurred." [Wis. Stat. § 801.05(5)(e)]. 

Here, it is uncontroverted that Mogi packed and sealed the dinnerware in Japan and others unpacked it at Mid-America's warehouse in Wisconsin.  That Mid-America had ordered Mogi to ship the dinnerware to Minneapolis -- the most convenient customs port of entry -- and thereafter to Wisconsin does not matter. 

Furthermore, the statutory exercise of personal jurisdiction comported with the due process requirements of the Fourteenth Amendment.  "First, it is undisputed that Mogi directed a number of faxes to [Mid-America's president] in Wisconsin.  Mogi's faxes contained not only recommendations about sourcing the dinnerware and information about price, quantity, and shipping, but also specific representations and assurances about the quality of the dinnerware (most notably Mogi's representation that the dinnerware would comply with federal lead standards).  Additionally, ... Mogi sent various sample products directly to Mid-America ... for ... inspection and approval.  Second, ... Mogi's merchandise manager .. volunteered to meet with [Mid-America's president] in Wisconsin. ... Third, the record unambiguously reveals that Mogi was aware that the ... dinnerware it shipped was destined for Mid-America's warehouse ... Finally, after it was determined that the ... fruit/salad bowls exceeded leachable lead standards, ... Mogi shipped 348 replacement bowls by air directly to Mid-America ... Viewed collectively, the foregoing facts clearly establish that Mogi purposefully directed its efforts toward Mid-America in connection with the ... dinnerware transaction." [slip op. 10-11]

Finally, based on Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), the Court sees the exercise of jurisdiction as reasonable.  This is not a complex case and nor is the burden of defending on Mogi unduly onerous.  In addition, Wisconsin has a compelling interest in the litigation because Mogi's conduct had exposed its residents to hazardous products.  "Finally, Mogi has not identified any substantive or procedural policies of Japan that are affected by the assertion of jurisdiction in this case, and we discern none." [slip op. 14]

Citation: Mid-America Tablewares, Inc. v. Mogi Trading Co., Ltd., 100 F.3d 1353 (7th Cir. 1996).

SERVICE OF PROCESS

In case of first impression, Fifth Circuit holds that admiralty claims arise under "federal law" within the meaning of Fed.R.Civ.P. 4(k)(2); thus service of process may establish prima facie jurisdiction over foreign defendant

The vessels M/V Ya Mawlaya and the M/V New World collided in international waters off the coast of Portugal.  World Tanker Carriers Corp. (World Tankers) of Liberia, the owner of the New World, sued several Cypriot parties who have ownership or management interests in the Ya Mawlaya in U.S. district court in Louisiana.  The court then combined the suit with several others involving foreign parties that stemmed from the same collision. 

The plaintiffs claimed that the foreign defendants had enough aggregated contacts with the U.S. as a whole to satisfy due process concerns.  The district court, however, granted the defendants' motion to dismiss for lack of personal jurisdiction based on the Louisiana long-arm statute and Fed.R.Civ.P. 4(k)(2).  It concluded  that the principle of aggregating contacts applies only to "federal question" cases and not to admiralty matters.

The U.S. Court of Appeals for the Fifth Circuit reverses. Under Rule 4(k)(2), serving a summons or filing a waiver of service permits personal jurisdiction over foreign defendants for claims arising under federal law as long as the defendant has enough contacts to satisfy the due process concerns of the long-arm statute.

As a matter of first impression in the Fifth Circuit, the Court holds that admiralty claims are "claims arising under federal law" within the meaning of the Rule.  In fact, the substantive federal maritime law of the U.S. is federal law, except where the "maritime but local" doctrine applies.  Because Rule 4(k)(2) applies in admiralty cases, the Court remands for additional jurisdictional discovery as to whether the defendants' nationwide contacts make out a prima facie showing of jurisdiction.

Citation:  World Tanker Carriers Corp. v. MV Ya Mawlaya, 99 F.3d 717 (5th Cir. 1996).

PROCEDURE

In case of extensive international bank fraud, Eleventh Circuit finds that equitable affirmative defenses were properly allowed in Venezuelan bank's action at law against U.S. subsidiary of Swiss bank that had been involved in laundering the illegal proceeds

Banco Industrial de Venezuela, C.A. (BIV) is a development bank owned by the government of Venezuela.  To promote the importation of essential goods not produced in Venezuela such as farm machinery and medicines, Venezuela instituted in 1983 a preferential exchange rate for U.S. Dollars.  After receiving substantial bribes, BIV's vice president approved letters of credit for non-existent imports and then got reimbursed by the government.  In this way, BIV lost more than $1,618,000.  BIV sued the Miami subsidiary of Credit Suisse bank and one of its attorneys who had allegedly taken part in laundering the fraudulent proceeds.  The jury found that the equitable defenses of estoppel and in pari delicto barred BIV from recovering from defendants but awarded punitive damages of $21,000 against the attorney.

The U.S. Court of Appeals for the Eleventh Circuit finds that the lower court had properly allowed the equitable affirmative defenses in BIV's action at law.  The court below had also properly accepted the jury's finding that BIV's fault equalled or exceeded the defendants' fault.  BIV complained that it is against public policy to let wrongdoers keep their fraudulent gains because it would immunize those who conspire with bank employees.  The Court rejects that argument because the bank is responsible for the acts of its high-ranking employee.

Citation: Banco Industrial de Venezuela, C.A. v. Credit Suisse, 99 F.3d 1045 (11th Cir. 1996).

SEX CRIMES

United Kingdom enacts legislation on conspiracy and incitement to commit certain sexual offenses with links both to U.K. and to foreign nations

Effective on October 1, 1996, the U.K. has enacted the Sexual Offences (Conspiracy and Incitement) Act 1996.  Some examples of listed offenses include rape, intercourse with underage girls, buggery, and indecent assaults on either boys or girls.  It is applicable under somewhat differing conditions in England and Wales on the one hand and in Northern Ireland and Scotland on the other. 

To bring these transnational offenses within existing provisions on criminal conspiracy, the following elements must be present.  First, carrying out the agreement must involve some act or other event that the parties intend to take place in a country other than the U.K.  Second, that act or event must constitute an offense under the laws of that other nation.  Third, the agreement must come within existing law but for the fact that the links to foreign territory would make it untriable in England or Wales.  Finally, forming or joining the agreement or some other pertinent act or omission must have taken place in England or Wales.

As to the incitement aspects, there are three major conditions for application of the new Act.  First, the act of incitement to commit a listed sexual offense that took place in England or Wales must violate existing law except that the planned offense would not be a triable offense in England or Wales.  Second, the inciter must have intended that all of part of what he had in view would take place on foreign territory.  Third, what the inciter planned to do on foreign territory must violate the criminal laws applicable in that territory.  The new Act treats any act of incitement by message as done in England or Wales if the message is either sent or received in England or Wales.

The Court is to accept the triggering allegations of the prosecutor unless the defense makes timely objection and demands that the prosecutor shoulder the burden of proving the applicability of the new Act.  Under both the conspiracy and incitement provisions, it does not affect guilt that the accused was a British citizen at the time of any pertinent act or omission.

Citation:  Sexual Offences (Conspiracy and Incitement) Act 1996 (c 29).

TAXATION

Russian statute specifies requirements for keeping tax records of foreign and international business organizations

Based on the "Instruction on the Rules of Recording Taxpayers," the Russian Federation published a statute that specifies the tax record requirements for foreign and international organizations.  For example, it provides:

- for the assignment of a taxpayer identification number where the organization engages in business activities for more than one month or has property in the Russian Federation that is not connected with the activity conducted by the organization's branch.

- for record-keeping as to foreign legal persons according to the requirements in Section 2 of Russian Federation State Tax Service Instruction No. 34 of June 16, 1995, on Taxation of Foreign Legal Persons' Profit and Income, and this Statute.

- for the filing of notice by natural persons permanently representing a foreign legal person within 30 days after the representation begins.

The Statute describes the documents that are required for such tax-related notifications.  The competent authority is the Tax Inspectorate.

Citation:  Statute On Specific Aspects Of Tax‑Agency Records Of Organizations Formed Under The Legislation Of Foreign States And Of International Organizations, 1996 Russian Federation State Tax Service Letter No. VA‑4‑06/57n.  [For more information, please call the Economic Section of the Embassy of the Russian Federation in Washington, D.C. at (202) 298-5757, or the U.S. Department of Commerce at (202) 482-2296 (Russian Federation Desk)].

TRADE

WTO Panel issues report regarding U.S-Costa Rica dispute involving restrictions on imports of cotton and man‑made fibre

On November 8, 1996, a dispute settlement Panel of the World Trade Organization (WTO) circulated a final report concerning a dispute between the U.S and Costa Rica.  This conflict involves U.S. restrictions on imports of cotton and man-made fiber from Costa Rica, allegedly in violation of the Uruguay Round Agreement on Textiles and Clothing (ATC).

The ATC lets an importing WTO member country take transitional safeguard measures on trade in a textile or apparel product from an exporting country.  The importer must, however, follow certain steps.  First, the importing country must show that increased imports of the product will cause serious damage to the exporter's domestic industry.  Second, the importing country must find that it can ascribe the damage to trade from one or more exporting countries.  Finally, the importing country must ask for discussions with each one of these countries.

The U.S. imposed a safeguard on imports of cotton and man‑made fiber underwear from Costa Rica for products exported on or after March 27, 1995.  After the WTO Textiles Monitoring Body had completed its review of the action, Costa Rica objected to this action under the WTO dispute settlement rules in December 1995.  Costa Rica argued that, by imposing a unilateral quantitative restriction on cotton and man-made fibre underwear classified in U.S. textile category 352/652, the U.S. violated Articles 2, 6 and 8 of the ATC.  The U.S. essentially argued that it had respected its ATC obligations. 

The report of the Panel essentially upholds Costa Rica's complaint.  The Panel, however, made several findings favorable or acceptable to the U.S.  For example, the Panel upholds the U.S. ability to take safeguard action on re‑import trade and U.S. flexibility in providing favorable treatment to that trade in accordance with the rules of the WTO textiles agreement. 

On November 11, 1996, Costa Rica notified its decision to appeal certain issues of law in the Panel report as well as legal interpretations developed by the Panel.

Citation: United States - Restrictions Imports of Cotton and Man‑Made Fibre (WT/DS24/R, November 1996). U.S. Trade Representative Press Release No. 96‑88 (November 8, 1996). [You may download the report from the WTO's Internet site (http://wto/dispute/undwear.wp5).]

Amendment to U.S.-Israel Free Trade Area Implementation Act provides President with additional proclamation authority regarding West Bank, Gaza Strip or qualifying industrial zone

The U.S. Congress has amended the U.S.-Israel Free Trade Implementation Act of 1985 [19 U.S.C. 2112 note] to allow the President to abolish or alter a duty "if (1) that article is wholly the growth, product, or manufacture of the West Bank, the Gaza Strip, or a qualifying industrial zone or is a new or different article of commerce that has been grown, produced, or manufactured in the West Bank, the Gaza Strip, or a qualifying industrial zone." [Sec. 9(a)(1)].  The "qualifying industrial zone" encompasses the "territory of Israel and Jordan or Israel and Egypt" as specified by the President.

Citation: United States-Israel Free Trade Area Implementation Act, Amendment, Pub.L. No. 104-234 (October 2, 1996), H.R. 3074, 110 Stat. 3058. [Editors' Note:  On November 5, 1996, the U.S. and Israel signed an agricultural trade agreement.  See 1996 Int'l L. Update 146.]

TRANSPORTATION

U.S. adapts regulations on transport of hazardous materials to international rules

The U.S. Department of Transportation, Research and Special Programs Administration (RSPA), has issued a final rule to adapt U.S. regulations to changes in international rules for the carriage of hazardous materials.  In particular, it adapts 49 C.F.R. Part 171 to recent changes in:

- The International Maritime Organization's Maritime Dangerous Goods Code (IMDG Code), and

- The International Civil Aviation Organization's Technical Instructions for the Safe Transport of Dangerous Goods by Air (ICAO Technical Instructions).

The rule incorporates the IMDG Code (Amendment 28) and the ICAO Technical Instructions (1997‑98) by reference.  RSPA will issue another final rule to carry out those specific changes in the IMDG Code and the ICAO Technical Instructions.

Though the effective date of these amendments is June 1, 1997, RSPA permits voluntary compliance starting on January 1, 1997.

Citation: 61 Federal Register 65958 (December 16, 1996).

- NAFTA Panel rules against U.S. in case of Canadian agricultural tariffs:  On July 14, 1995, the U.S. asked for a dispute settlement Panel under Article 2008 of the North American Free Trade Agreement (NAFTA) to determine whether Canada's tariffs on certain U.S. agricultural products overstepped those allowed under NAFTA.  According to the complaint, Canada applies unduly high tariffs to U.S. dairy products, poultry, eggs, barley and margarine, in violation of NAFTA Article 302(1) and (2) [elimination of customs duties].  In a report issued on December 2, 1996, the Panel found that the Canadian customs duties NAFTA-consistent.  Essentially, the Panel agreed with Canada's contention that its actions in imposing tariffs on over-quota imports of agricultural products are required under the WTO Agreement on Agriculture.  Those obligations are binding under NAFTA by virtue of Article 710 of the Canada-United States Free Trade Agreement, which provides that the parties retain their rights and obligations under GATT.  Citation:  NAFTA, In the Matter of Tariffs Applied by Canada to Certain U.S-Origin Agricultural Products, File No. CDA-95-2008-01, Final Report of the Panel; U.S. Trade Representative press release 96-93 (December 2, 1996).

- U.S. has extended most-favored nation treatment to Cambodia:  With an Act of Congress, the U.S. has extended most-favored nation treatment to Cambodia to normalize commercial relations.  As a result, "Kampuchea" will no longer appear as a restricted country on the Harmonized Tariff Schedule.  Citation: Pub.L. No. 104-203 (September 25, 1996), 110 Stat. 2872.  [Editors' Note: The U.S. and Cambodia recently signed a free-trade agreement, see 1996 Int'l L. Update 135.]

- EU to step up financial law enforcement with more intensive inspections:  The EU Council has issued a sweeping regulation that will permit on-the-spot checks and inspections to protect the EU's financial interests against fraud and other irregularities.  The regulation will serve, for example, to detect "serious or transnational irregularities or irregularities that may involve economic operators acting in several Member States." (Article 2).  The Commission will carry out the inspections through "Commission Inspectors" and other entities providing technical assistance (Article 6).  The inspections may encompass, for example, professional books and invoices including bank statements, computer data, product samples, accounting documents, as well as production methods (Article 7).  The regulation goes into effect on January 1, 1997.  Citation: Council Regulation (Euratom, EC) No 2185/96 ..., 1996 O.J. of the European Communities (L 292) 2, 15 November 1996.

- U.S. and Thailand have entered into air transport agreement:  The agreement incorporates by specific reference the Chicago Convention of 1944 and its subsequent annexes and amendments ratified by both the U.S. and the Kingdom of Thailand.  The agreement accords the customary overflight and landing rights.  Each party has the right to designate airlines to service each other's airfields.  The agreement bars discrimination against the airlines of each and provides that local laws and regulations dealing with air transport shall apply to disembarking and departures of each others' airlines.  Each party agrees to maintain safety standards satisfactory to the other party.  As to security, compliance with ICAO and other norms is pledged.  Each party assures the other the chance to set up commercial facilities on its territory.  Certain customs exemptions are also included.  Other provisions deal with pricing and fair competition.  The Agreement entered into force on May 8, 1996.  Citation: Air Transport Agreement between the Government of the United States of America and the Government of the Kingdom of Thailand, State Dept. No. 96-99, KAV No. 4601.

- Treasury Department clarifies requirements of Iran sanctions: The U.S. Department of the Treasury has issued a final rule to clarify the scope of the reporting requirements for dealings with Iran.  These apply not only to transactions in crude oil or natural gas but also to deals involving petrochemicals as well as to providing goods and services related to the oil and gas business.  The effective date of the rule is November 14, 1996.  Citation: 61 Federal Register 58480 (November 15, 1996).

- U.S. establishes "maritime security fleet":  Under the Maritime Security Act of 1996, the Secretary of Transportation will establish a fleet of "active, militarily useful, privately-owned vessels to meet national defense and other security requirements and maintain a United States presence in international commercial shipping." [Sec. 651(a)].  The Act sets out the eligibility requirements for these vessels.  To be included in the fleet, the vessel owner or operator must enter into an operating agreement with the Secretary.  An operating agreement requires the operation of the vessel exclusively in foreign trade or in mixed foreign and domestic trade.  Citation: Maritime Security Act of 1996, Pub.L. No. 104-239 (October 8, 1996), H.R. 1350, 110 Stat. 3118, 46 App. U.S.C.A. Ch. 27.

- How to find international trade information on the Internet:  The U.S. International Trade Administration (ITA) at the U.S. Department of Commerce has published "A Guide to International Business Information on the Internet."  It describes internet sites such as the National Trade Data Bank and the Export Legal Assistance Network.  The article is available on the internet, with links, at http://www.ita.doc.gov/bizam/netlinx.html.  [For a FAX copy of the article, please contact the ITA, Media Relations, Phone: (202) 482-3809; FAX: (202) 482-5819].

- CFTC facilitates New Zealand exchange dealers' solicitation of U.S. business:  The Commodity Futures Trading Commission (CFTC) has granted New Zealand Futures and Options Exchange dealers relief from Commission rule 30.10, 17 C.F.R. 30.10 (1996).  That eases certain futures and options rules with respect to soliciting and accepting orders from U.S. customers for transactions on the New Zealand Exchange and on any non-U.S. exchange where the dealers are permitted under New Zealand law to conduct business.  The CFTC also confirms that the Limited Marketing Orders apply.  Under Commission rule 30.10, the CFTC may exempt non-U.S. persons (who are subject to a comparable regulatory system exemptions) from certain requirements -- such as disclosure and capital adequacy -- in soliciting or accepting orders directly from U.S. customers for foreign futures or option transactions.  Citation: 61 Federal Register 64985 (December 10, 1996).

- ICJ rejects U.S.'s jurisdictional objections in oil platforms case:  On December 12, 1996, a majority of the International Court of Justice (ICJ) rejected the U.S.'s contention that the ICJ lacked jurisdiction to review the dispute concerning oil platforms (Iran v. United States).  The case involves the destruction of Iranian oil platforms in 1987 and 1988 by U.S. warships in response to a missile attack.  The ICJ found jurisdiction based on Article XXI, paragraph 2 [disputes to be decided by ICJ if other means of settlement fail], of the U.S.-Iran Treaty of Amity, Economic Relations, and Consular Rights of 15 August 1955 [284 UNTS 93, TIAS No. 3853, 8 UST 899].  Two judges dissented.  Citation: ICJ Communiqué No. 96/34 (20 December 1996), No. 96/33 (12 December 1996); ICJ press release ICJ/547 (December 12, 1996).

- U.S. Commerce Department revises license exceptions for Commerce Control List of restricted export goods:  The Commerce Control List restricts the export of certain goods such as computers and chemicals that third nations can use for military purposes.  The Bureau of Export Administration of the U.S. Department of Commerce has issued a final rule that revises the Export Administration Regulations (EAR).  It reorganizes those license exceptions into separate sections, each with a group symbol used for export clearance purposes (such as CIV, meaning "civil end-users").  The rule also makes a few substantive changes.  For example, it moves Laos and Cambodia from "Computer (CTP) Tier 2" to "Computer Tier 3" for purposes of license exceptions.  Citation: 61 Federal Register 64272 (December 4, 1996).

- U.S. Department of Commerce eases export requirements for encryption equipment:  The U.S. Department of Commerce, Bureau of Export Administration, has issued an interim final rule to facilitate the export of "key escrow" encryption equipment and software (15 C.F.R. Parts 734, 740, 742, 762, 774).  The Bureau of Export Administration will accept license applications for the export and re-export of key escrow encryption items in unlimited quantities for all destinations except to embargoed places and countries that, according to the Secretary of State, support international terrorism.  The effective date is December 13, 1996.  Commerce will publish further regulations on encryption equipment in the near future.  Citation: 61 Federal Register 65462 (December 13, 1996) [See also Presidential Executive Order on Crypto Export Control Administration of November 15, 1996, 1996 WL 662440 (White House)].