Israeli Ministry of Economy issues Draft Enforcement Instructions for Public Comment

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On May 18, 2020, the Israeli Ministry of Economy and Industry (MOE) issued for public comment draft enforcement instructions for the Israeli Customs Administration. The goal of these instructions is to provide clarification to Customs regarding the enforcement of civilian export controls.

Background

Israel has two separate export control regimes. One regime regulates controlled defense exports and is administered by the Ministry of Defense, and the second regime regulates controlled civilian exports and is administered by the MOE. The distinction between these two regimes is similar to the EAR/ITAR distinction under US export control laws.

Through its civilian export control regime, Israel regulates the export of closed lists of “goods,” “technologies,” and “services.” These lists include the Wassenaar Arrangement’s List of Dual-Use Goods and Technologies (with the exception of Category 5(2) on Information Security), as well as a unique Israeli export control list of chemical, biological, and nuclear-related items, which is based on lists administered by the Australia Group, Nuclear Suppliers Group, and Chemical Weapons Convention.

Past Enforcement by the MOE

While the MOE is competent to enforce its export control regime through administrative and criminal sanctions under the Import and Export Ordinance [New Version]-1979, over the last few years, it has engaged in little to no such enforcement. This is in sharp contrast with the Ministry of Defense, which has been actively enforcing defense export controls. Through these draft instructions (alongside other activity, such as increased audits of companies), the MOE is signaling its intent to strengthen its own enforcement arm.

This isn’t just a case of muscle-flexing, however.

Over the last two years, the MOE’s export control department has been undergoing reform. These draft instructions are just one example of numerous efforts by the MOE to strengthen the civilian export control regime by improving the efficiency and efficacy of the department. Other efforts have included reaching out to the private sector to improve dialogue and improving the export license application process.

Notable Points in the Draft Instructions

The draft instructions published by the MOE are intended to provide clear guidance to Customs, as well as to breath life into the [somewhat antiquated] enforcement powers currently held by the MOE.

The following are a few critical points found in these draft instructions:

  • The establishment of an “Export Committee” to support enforcement. This committee’s powers will include advising the MOE on sanctioning offenders, advising on cases referred by Customs, and reviewing decisions by Customs as referred (or challenged) by affected exporters.
  • The establishment of a matrix that sets sanctions in accordance with the offense committed. The matrix included in the draft suggests a lock-step of increasing sanctions based on the type of offense committed and the number of previous offenses (in the preceding two years). Sanctions suggested by the draft include “ransoming” contraband, determined as a percentage of the value of that contraband, and bringing offenders before the Export Committee for further deliberation.
  • More serious offenses will involve being brought before the Export Committee after a first offense.
  • Neither the Export Committee nor the MOE more generally will be bound by these draft instructions. Specifically, the MOE will remain competent to sanction offenders as permitted at law (e.g. issuing fines (or ransoming contraband) at values exceeding those listed in the draft instructions; confiscating property; and imprisoning offenders).

Comments to the draft instructions must be submitted by June 8, 2020 at 12:00 (IST).



www.lexology.com2020-05-20 15:00:27

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