International Law Advisory - President Bush Signs Executive Order Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters

Yesterday, President Bush signed an Executive Order blocking the property of certain identified proliferators of weapons of mass destruction and their supporters  The Executive Order was issued under the International Emergency Economic Powers Act (“IEEPA”), among other statutory authorities, and became effective immediately.  A copy of the Executive Order is attached.

The Executive Order was issued to supplement actions taken by the United States Government pursuant to Executive Order 12938 (implemented at 31 C.F.R. Part 539), issued by President Clinton on November 14, 1994.  That order imposed a ban on the direct or indirect importation into the United States of any goods, technology or services produced or provided by foreign persons identified by the Secretary of State has having an involvement in the proliferation of weapons of mass destruction. 

Yesterday’s Executive Order contains the following provisions:

Blocking Property of WMD Proliferators and Supporters

The Order blocks and prohibits dealing in all property and interests in property of certain named persons “in the United States , that hereafter come within the United States , or that are or hereafter come within the possession or control of United States persons.”  This blocking order applies to specific parties identified in the order including:

• all persons listed in the annex to the order:  Korea Mining Development Trading Corporation (North Korea); Tanchon Commercial Bank (North Korea); Korea Ryonbong General Corporation (North Korea); Aerospace Industries Organization (Iran); Shahid Hemmat Industrial Group (Iran); Shahid Bakeri Industrial Group (Iran); Atomic Energy Organization of Iran (Iran), and; Scientific Studies and Research Center (Syria); the entities listed have been incorporated into OFAC’s SDN list with the designation “[NPWMD]”;
• foreign persons that the State Department determines to have engaged or attempted to engage in activities or transactions that have materially contributed to the proliferation of weapons of mass destruction or their means of delivery (including missiles capable of delivering such weapons) by any person or foreign country of proliferation concern (the term “foreign country of proliferation concern” is not defined);
• any person that the Treasury Department determines to have provided financial, material, technological or other support for, or goods or services in support of, (1) any activity or transaction described immediately above, or (2) any person whose property and interests in property are blocked pursuant to this order; and
• any person that the Treasury Department determines to be owned or controlled by, or acting on behalf of, directly or indirectly, any person whose property and interests in property are blocked pursuant to this order.

The Order states that no notice must be given prior to adding persons or entities to the categories listed above.

Prohibition on Transactions and Dealings Involving Blocked Property

The Executive Order prohibits any “transaction or dealing” (either by a U.S. person or within the United States ) in property or interests in the blocked property identified above.  Prohibited transactions and dealings include providing or receiving any funds, goods, or services to, from, or for the benefit of, any person whose property is blocked under this Order.

The Order prohibits any transaction to evade or avoid the other prohibitions its sets out, as well as any conspiracy to violate its prohibitions.

The current Executive Order also amends Executive Order 12938 to create a modified list of actions that, if taken by foreign persons, may lead to the imposition of sanctions.  Under the new Executive Order, where a foreign person has “engaged or attempted to engage, in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery (including missiles capable of delivering such weapons), including any efforts to manufacture, acquire, possess, develop, transport, transfer or use such items, by any person or foreign country of proliferation concern” the sanctions provided for in that Executive Order may be imposed.  (Significant revisions to the section are italicized.)

The Secretary of the Treasury, through the Office of Foreign Assets Control (“OFAC”), is authorized to promulgate rules and regulations as necessary to carry out the purpose of this order, and is authorized to maintain and amend the list of persons and entities whose property and interests in property are blocked.

We will continue to keep you apprised of sanctions and export controls developments.  If you have any questions, please feel free to contact Ed Krauland at 202.429.8083; Julia Court Ryan or Meredith Rathbone at 202.429.6437.