June 8, 2006
On May 15, 2006, the United States Department of State announced an arms embargo against Venezuela, identifying that country as not fully cooperating with U.S. counterterrorism efforts. This embargo will also bar the provision of defense-related services and technical data, creating a potentially broad and complex set of restrictions. While this embargo targets defense articles and related services, the announcement may also trigger broader restrictions on exports to Venezuela.
As of October 1, 2006, no new licenses for the commercial export of defense articles to Venezuela will be available. Retransfer of U.S.-origin defense goods and technology will also be prohibited after this date. Additionally, even before October 1, the State Department has announced that exports to Venezuela will be more closely reviewed, saying that it will "carefully scrutinize all" proposed sales of defense articles to Venezuela on a case-by-case basis. However, until the arms embargo takes effect, and barring publication of additional rule changes, exports allowed under existing International Trade in Arms Regulations ("ITAR") exemptions will still be allowed.
Because Venezuela has now been identified as not fully cooperating with U.S. counterterrorism efforts, the United States Department of Commerce may also impose anti-terrorism controls on exports to Venezuela under the Export Administration Regulations ("EAR"). Export or reexport of commercial items to Venezuela may, therefore, require additional export licensing.
While the United States and Venezuela have close commercial ties, especially in the energy sector, political relations have been severely strained of late. Bilateral cooperation in anti-narcotics and anti-terrorism actions has broken down, and Venezuela’s President Chavez has applied heated rhetoric against broader U.S. counterterrorism and political interests. Venezuela now joins Cuba, Iran, North Korea, Sudan, Syria and Libya on the list of countries not cooperating with U.S. counterterrorism efforts. (Libya is expected to be removed from this list later this summer.)
Gibson Dunn & Crutcher’s International Trade Regulation and Compliance practice group is monitoring the development of new export controls for Venezuela and is prepared to address any questions regarding the embargo and its commercial effects.
For further information, please contact Judith A. Lee (202-887-3591), Jim Slear (202-955-8578) or David Wharwood (202-887-3579) in Gibson, Dunn & Crutcher’s Washington, D.C. office.
© 2006 Gibson, Dunn & Crutcher LLP