Nicaragua Added to ITAR §126.1 Prohibited Destinations
On March 15, 2024, the Department of State, Directorate of Defense Trade Controls (DDTC) issued a new rule (89 FR 18796) that adds Nicaragua to the International Traffic in Arms Regulations (ITAR) § 126.1 list of prohibited destinations.
The primary rationales of the new listing are based on human rights concerns and security cooperation with Russia. Nicaragua is now listed in § 126.1(p) with case-by-case exceptions related to “non-lethal military equipment intended solely for humanitarian assistance, to include natural disaster relief.”
While the main effect of this change will be that defense articles may no longer be exported or reexported to or imported from Nicaragua, there are a number of follow-on effects of the §126.1 listing that companies need to be aware of, including:
- Proposed and final sales: Broad prohibition includes proposals and presentations to individuals and companies as well as for actual sales and exports. For example, information on the equipment’s performance characteristics, price, and probable availability for delivery would be a proposal or presentation requiring a license or other approval.
- Disclosures: An affirmative duty to immediately inform DDTC of any “proposed, final, or actual sale, export, transfer, reexport, or retransfer of articles, services, or data.” Failure to provide a full disclosure within a reasonable time may result in a decision by State/DTCC to not consider the notification as a mitigating factor in determining the appropriate disposition of the violation.
- Exemptions: Most exemptions are not available for § 126.1 countries.
- Dual/Third Country Nationals: § 126.18(c)(2) will require screening for substantive contacts with Nicaragua.
- Brokering: Note Part 129 for additional restrictions.
The listing was effective on the date of publication, March 15th. The State Department also published a press release on the new restrictions.
Nicaragua Faces New EAR Restrictions
Also on March 15, the Department of Commerce, Bureau of Industry and Security (BIS) issued a new rule (89 FR 18780) making parallel changes to the Export Administration Regulations (EAR).
Based on the same rationale provided in the § 126.1 notice, Cambodia has been added to the following EAR lists:
- Country Group D:1 (National Security concern) (removal from Country Group B makes certain license exceptions unavailable and foreign direct product rules now apply);
- Countries subject to the licensing policy in EAR § 742.4(b)(7) (review policy for national security-controlled items, based on risk of diversion to military end user or end use);
- Countries subject to military end use and end user controls in § 744.21; and
- Countries subject to a U.S. arms embargo under Country Group D:5.
Seven Countries Now Subject to MEU Rule
Nicaragua joins Belarus, Burma, Cambodia, China, Russia, and Venezuela as subject to the military end use and end user controls. Although no entity in Nicaragua has yet been identified as a “Military End User” (MEU) in Supplement No. 7 to Part 744, it is important to note that the MEU List is not an exclusive list of parties subject to the MEU restrictions. Careful evaluation of potential exports to those seven countries is advised. Even business entities may be considered “military end users” which are defined broadly to include “any person or entity whose actions or functions are intended to support ‘military end uses.’”