BIS ANNOUNCES BAN ON LUXURY EXPORTS TO NORTH KOREA

In response to North Korea's test launch of ballistic missiles and testing of a nuclear device last year and in accordance with UN Security Council Resolution 1718, the U.S. Government announced on Friday that it is imposing new export and reexport controls on North Korea. Specifically, the Commerce Department's Bureau of Industry and Security (“BIS”) will require a license for the export and reexport to North Korea of all items subject to the Export Administration Regulations (“EAR”), [1] except food and medicines that are classified as EAR99. Previously only items controlled on the Commerce Control List (“CCL”) for Nuclear Nonproliferation and Missile Technology reasons required a Commerce license for export or reexport to North Korea.

This move by the U.S. was prompted by a U.N. Security Council resolution prohibiting the export of all luxury goods to North Korea in an effort to target North Korean leader Kim Jong-Il and reduce his support among elite families. Pursuant to the new regulations, all applications for the export or reexport of luxury goods to North Korea will be reviewed by BIS under a general policy of denial. The BIS list of “luxury goods” includes luxury automobiles, yachts, gems, jewelry, cosmetics, perfumes, furs, designer clothing, luxury watches, rugs and tapestries, electronic entertainment software and equipment, sports equipment, tobacco, wine and other alcoholic beverages, musical instruments, arts, antiques and other collectible items. Exports or reexports of humanitarian items ( e.g. blankets and medical supplies) will be reviewed under a general policy of approval. These regulations are effective as of January 26, 2007.

[1] Items subject to the EAR include all products located in the United States, all U.S.-origin products and technology, wherever located, all U.S.-origin parts, components or materials incorporated abroad into foreign-made products, all foreign-made products that are the direct product of U.S.-origin technology, products incorporating more than a de minimis amount of U.S.-origin content; and U.S.-origin technology commingled with non-U.S.-origin technology.