On Monday, May 15, 2006, the Bush administration announced a comprehensive ban on the sale of arms to Venezuela. This action is reportedly in response to Venezuela’s recent growth in arms acquisition and military modernization efforts. The U.S. State Department has also cited Venezuela’s close ties with terrorist sponsoring countries, such as Iran and Cuba, in further support of this action.
The impact of this sanction is significant and far-reaching – even for companies that do not market traditional military products or services. This represents the first commercially significant U.S. trade embargo targeted at a country in this hemisphere in decades. Absent a policy shift, additional trade restrictions are likely.
A U.S. arms embargo prohibits the sale of defense articles and defense services to specific, named countries. In addition to Venezuela, current arms sale prohibitions apply to exports to Belarus, Burma, China, Cuba, Haiti, Iran, Liberia, Libya, North Korea, Somalia, the Sudan, Syria and Vietnam.
Companies engaged in international business, in particular those in the energy, mining, and natural resources industries, and those doing business in Venezuela or Latin America should be aware of this important development. The arms embargo not only prohibits the physical export of items, but also the provision of defense-related services. For example, U.S. security firms supporting the oil and gas or energy sector may be prohibited from providing certain services in Venezuela. The State Department has broad discretion in extending its jurisdiction over items, services or data based on potential military or intelligence applicability, and penalties, both civil and criminal, can be severe.
Holland & Hart’s Export Controls practice group is monitoring the publication of the implementing regulations for this new trade sanction and is prepared to address your questions regarding this embargo. Please contact one of the following Export Controls attorneys in the Denver office for assistance or additional information:
Dave Glynn (303) 295-8071
Email: dglynn@hollandhart.com
Trip Mackintosh (303) 295-8186
Email: tmackintosh@hollandhart.com
Lizbeth Rodriguez (303) 295-8399
Email: lrodriguez@hollandhart.com