Nicaragua export restrictions have been increased by both the Directorate of Defense Trade Controls (DDTC) and the Bureau of Industry and Security (BIS) as of March of 2024. These actions were taken in response to United States national security and foreign policy concerns regarding the continuing deterioration of the nation’s human rights, civil institutions, and Nicaragua’s increased cooperation with Russia.
DDTC Specific Regulatory Changes
The DDTC, which under the authority of the Department of State, administers the International Traffic in Arms Regulations (ITAR), has added Nicaragua to the list of countries for which it, by policy, denies approvals for export or import of defense articles and services. Under this revision of ITAR, Nicaragua has been added to the list of countries detailed in 22 CFR 126.1 Prohibited exports, imports, and sales to or from certain countries.
This policy of denial is applicable to all defense articles and services. The only exception to this policy are imports or exports where military equipment are intended solely for humanitarian assistance, including natural disaster relief. These exceptions for license applications are issued on a case-by-case basis.
Further restrictions were added under 22 CFR 129.7 Policy on embargoes and other proscriptions. These action prohibits brokering activities to specific countries. As the effect of this rulemaking is perceived to have minimal consequences for federal agencies or private organizations and groups, these restrictions do not require interagency analysis.
BIS Specific Regulatory Changes
The BIS, which administers the Export Administration Regulations (EAR), has moved Nicaragua from the Country Group B List to Country Group D5. Group B countries are countries for which licensing is generally available. Group D countries have fewer license exemptions and include around 50 countries such as Syria, Russia, Iran Yemen, and Venezuela. This group is divided into five areas of concern: D: 1, National Security, D: 2 Nuclear, D:3 Chemical & Biological, D: 4 Missile Technology, and D: 5 U.S. Arms Embargoed Countries.
This new level of restriction effects the export, reexport, and transfer of items subject to the EAR including commodities, software and technology. Previous actions taken by the BIS include the addition of the Nicaraguan National Police to the Entity List and restriction of items to the country’s security and military agencies. The BIS has taken these actions as part of an ongoing effort to promote human rights and democracy.
A Call to Actions for Businesses Involved in Export
Export regulations have been in a constant state of flux for the last decade as the Federal Government has used these powerful tools to pursue its national security and foreign policy objectives.
Enforcement activities have resulted in more severe civil and criminal penalties. In 2023, these activities have resulted in a record number of convictions, and denial orders. Additionally, numerous parties were placed on the Specially Designated Nationals, Blocked Persons, and Entity Lists, effectively ending their ability to conduct lawful business.
Businesses must ensure that they do not violate export regulations by enacting viable Export Compliance Management Programs (ECMP). These programs are a requirement for both the Export Administration Regulations and the International Traffic in Arms Regulations (ITAR). While most businesses involved with the ITAR have been proactive in compliance, many involved with the export of dual-use goods enumerated in the EAR have been less diligent.
Export Compliance Management Programs establish clearly defined policies and procedures for all departments within an organization. They ensure that registration, item classifications, license applications, denied part screening, and security measures are taken that will prevent violation. They also ensure that training, auditing, and record keeping are maintained according to requirements.
CVG Strategy Export Compliance Management Programs
As these latest Nicaragua export restrictions illustrate, export compliance is a growing and dynamic concern for businesses engaged in sales of items that are intended for international sales or could result in international sales. Failure to comply with regulations can result in criminal prosecution including imprisonment and fines. It can also result in civil penalties and disbarment from export activities.
CVG Strategy can help you in understanding the ITAR and EAR, and help you establish a coherent and effective export compliance program. We can perform export control classifications, perform audits, assist in filings for export licenses and educate your team. Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help.