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Commerce Stresses Due Diligence With Exports To Pakistan

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The U.S. Commerce Department's Bureau of Industry and Security (BIS) has published "due diligence" guidance urging companies to use extra care when exporting to Pakistan.

BIS has stepped up its attention toward Pakistan after the agency's Office of Export Enforcement investigations "revealed schemes to export items subject to the EAR (Export Administration Regulations) to nuclear- and missile-related entities in Pakistan listed on the Entity List without the required licenses."

The agency first imposed export controls on Pakistan since 1992. These controls were intensified by BIS after Pakistan detonated a nuclear device in 1998.

BIS routinely adds Pakistani firms and individuals to its Entity List for their efforts to import U.S.-made technology for use in the country's nuclear program, including most recently Engineering and Commercial Services and Solutions Engineering.

The agency has added others to its Entity List located in other countries that attempt to support Pakistan's nuclear program, such as Techcare Services FZ LLC in the United Arab Emirates and UEC (Pvt.) Ltd., located in Pakistan, Saudi Arabia and the United Arab Emirates.

BIS said in its due diligence guidance that U.S. exporters should learn to identify anomalies from ordering parties, know customers when the sale is through a reseller or distributor, have visibility of customers and take notice of drop shipments (ex-works) when the freight forwarder files export information in the Automated Export System.

Compliance involving Pakistan applies not only to direct exports but also to reexports and in-country transfers of items under the EAR, which means EAR99 items or those subject to the EAR but not listed on the Commerce Control List, and items controlled for antiterrorism (AT) purposes.

"This guideline published by BIS will be used as a benchmark to judge whether exporters, re-exporters and in-country transfers have exercised end-user due diligence," said Paul DiVecchio, a 40-year export compliance consultant based in Boston.

"If an investigation by U.S. authorities or other member countries of the Nuclear Suppliers Group and the Missile Control Technology Regime judge that there was negligence by the supplier in an end-use check, then there is a potential for penalty issuance," he said.

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