This memorandum is to briefly set forth the major changes we have made to the original draft model law provided by the Center for International Trade and Security (CITS) at the University of Georgia (“UGA draft”). In order to fully implement the United Nations Security Council’s resolution 1540 (“UNSC resolution 1540”) with regard to the prevention of the proliferation of weapons of mass destruction, we have referred to legislation implementing the UNSC resolution 1540 obligations by South Africa and Malaysia, as well as sample acts and guidelines provided by international organizations and non-governmental organizations. Some of the major changes we made to the UGA draft include the following: 1) a change from a treaty- based approach to a domestic law-based model Act; 2) the inclusion of specifically designated relevant Authorities to carry out specific duties as well as the designation of a Primary Coordinating Authority to serve as the point of contact; 3) filling in the gaps with respect to substantive obligations under the UNSC resolution 1540; 4) the reduction in language that appears to be overly trade-restrictive to make more trade-friendly; 5) the inclusion of personnel reliability requirement; and 6) the provision of alternative lists with respect to controlled items and end-users that can be adapted by CARICOM member states.
- A Treaty-Based Approach to a Domestic Law-Based Model Act
The UGA draft contained language that will be applicable to treaties (binding all CARICOM member states) and domestic law (binding one CARICOM member state). Per our first meeting on January 22, 2015, we have confirmed that this draft model Act was intended to be enacted by each CARICOM member state as domestic law. As such, we have changed the language in the UGA draft to be applicable to one state as domestic law, as opposed to treaty- based language binding all CARICOM member states. The only section where the draft model Act is referring to the CARICOM is in the preamble. We understand that compliance with the UNSC resolution 1540 is not only important for each CARICOM member state but is critical for the regional security of CARICOM as a whole. As such, we felt it was important to have the language stating CARICOM’s objective to pursue regional control over controlled items, as provided in the UGA draft.
- Designation of Relevant Authorities and a Primary Coordinating Authority
In the UGA draft, there was a reference to a “designated national authority,” “lawful authority,” “competent authority” and other types of “authority” but no definition was provided for the term “authority.” We understand that each CARICOM member state has established a National Authority as required under the Chemical Weapons Convention. However, in researching other states’ compliance with the UNSC resolution 1540, we have noticed that many states implement the UNSC resolution 1540 through various pieces of legislation with different agencies responsible for the implementation, instead of one law with one agency in charge. We understand that CARICOM member states intend to fully comply with the UNSC resolution 1540 with this draft model Act. As such, in case the National Authority does not have all the authorities required to implement the draft model Act, we have designated the ministries of industry, customs, foreign affairs, finance and justice to act as “relevant Authorities” in Section 23 of the draft model Act. This is done so that designated ministries together have sufficient authority to implement the draft model Act as well as to promulgate the regulations as may be necessary. In particular, we have included the Minister of Finance and the Department of Justice as “relevant Authorities” because states’ obligations under the UNSC resolution 1540 includes a prohibition of financing under Operative Paragraph (OP) 2 and adoption of effective enforcement under OP 2 and 3. Finally, the draft model Act provides flexibility in designating any other agencies as a relevant Authority.
We have also designated one of the relevant Authorities to serve as a Primary Coordinating Authority who will be responsible for an inter-agency coordination, including serving as the point of contact for assistance and developing appropriate ways to work with and inform industry and the public regarding their obligations. CARICOM member states are free to choose which relevant Authority will be designated as a Primary Coordinating Authority.
- Substantive Obligations Under the UNSC Resolution 1540
Some obligations under the UNSC resolution 1540 were missing in the UGA draft. For example, OP 3(b) requires states to “[d]evelop and maintain appropriate effective physical protection measures.” As the UGA draft made no reference to “physical protection,” we provided in Section 13(2)(c) of the draft model Act that the relevant Authority may condition the issuance of a permit if the “security and physical protection measures of controlled items” are not provided.
Another example is the brokering of controlled items. OP 3(d) requires states to have effective border controls including brokering in the sale of controlled items. Although Section 8 of the UGA draft provided that states have an authority to establish the prescribed process for registration of brokers, and Annex 7 provided a registration process, thereby inferring that brokers must be registered, the UGA draft did not explicitly state that brokers must be registered. As such, Section 10 of the draft model Act provides that all brokers must be registered, just like the scheme provided in Article 11 of the Strategic Trade Act 2010 in Malaysia.
- Trade-restrictive language to a more trade-friendly language
The UGA draft contained language that may have appeared overly trade restrictive. For example, Section 10 of the UGA draft on confidentiality seemed to afford a lesser degree of protection on confidentiality because information was not privileged and confidential under Section 10(2) if disclosure was required for the purpose of “national interest, national security or under any written law,” which were undefined in the UGA draft. We also felt that the language “knowingly” in Section 10(3) of the UGA draft was not sufficient to protect confidentiality as there would be no violation if confidential information were disclosed “recklessly” or “negligently.” As such, we followed the Implementation Kit for the Chemical Weapons Convention provided by the Organisation for the Prohibition of Chemical Weapons (OPCW) and the Non-Proliferation of Weapons of Mass Destruction Act, 1993 in South Africa to provide a stronger confidentiality regime while allowing relevant Authorities to disclose confidential information if necessary in order to enforce the draft model Act.
Additionally, we provided in Annex 5 of the draft model Act that CARICOM member states may add exemption provisions from the permission scheme under Sections 8 and 9 of the draft model Act to domestic activities dealing with certain dual-use items (such as schedule 2and 3 chemicals under the Chemical Weapons Convention), and to international trade activities with non-listed end-users dealing with dual-use items. By exempting certain activities which do not pose serious risks of undermining the purpose of the draft model Act, CARICOM member states can promote research, development, and other peaceful activities.
We also added a more trade-friendly language in the preamble. While the Preamble is not a binding provision, it can be helpful in interpreting the body of the draft model Act. Although the UGA draft aimed to fully implement obligations under the UNSC resolution 1540, it did not have the language that will promote international trade. Because promotion of trade is not an obligation under the UNSC resolution 1540, the body of the draft model Act does not contain such language. However, we included in the preamble that this draft model Act is to provide international peace and security without imposing “undue restrictions on trade,” and that development of science and technology should only serve for the benefit of humankind. Having spoken with an expert on international trade and export controls in the United States, we believe that implementation of the UNSC resolution 1540 will not impede international trade but will only encourage non-state actors to engage in international trade in a manner that fully complies with the draft model Act.
- Personnel Reliability
Personnel reliability is to ensure that permit applicants (individuals or entities) are reliable in dealing with dangerous materials, such as biological, chemical or nuclear-related materials. Annex 5.1 of the model draft Act sets forth several grounds under which authorized officers shall refuse to grant permits or special permits. Section 1(2) provides that authorized officers shall refuse to grant permits for any individual applicant who 1) is under certain age which is to be determined by CARICOM member states; 2) is an undischarged bankrupt; or 3) has been convicted of an offense that is to be determined by a relevant Authority of CARICOM member states. Section 1(3) provides that authorized officers shall refuse to grant permits for any entity applicant 1) which does not have a procedure or fails assure to undertake personnel background checks of their employees; 2) which has been the subject of a resolution that has been passed for voluntary winding up or for whom an order for winding up has been made by a court of competent jurisdiction; or 3) if the entity or any of its directors has been convicted of an offense as determined by a relevant Authority of CARICOM member states.
- Alternative Lists With Respect to Controlled Items and End-Users That Can Be Adapted by CARICOM Member States
1. Controlled Items List
As provided in Sections 8 and 9 of the draft model Act, any person (which includes a legal person) must acquire a permit (or a special permit for restricted end-users) to engage in relevant domestic or international trade activities with respect to controlled items. In the UGA draft, Annexes 1 and 2 provided that CARICOM member states may adopt military goods and dual-use lists developed by the European Union (EU). Annex 1 of the draft Model Act provides two additional alternative approaches as to which items list may be adopted by CARICOM member states. In addition to the EU list which consists of a common military list and a list of dual-use items, the draft model Act suggests that CARICOM member states may adopt 1) three annexure lists under the Non-Proliferation of Weapons of Mass Destruction Act, 1993 in South Africa; or 2) various lists that have been accepted multilaterally or plurilaterally. Annex 1 of the draft model Act does not suggest controlled items list provided by the United States as there is no consolidated list available.
2. End-Users List
As provided in Section 9 of the draft model Act, engaging in relevant international trade activities with prohibited end-users is banned, and no person shall engage in relevant international trade activities with restricted end-users without a special permit. In the UGA draft, Annex 3 provided that list of restricted parties is “[t]o be constructed by CARICOM as appropriate.” Thus, Annexes 2 and 3 of the draft model Act propose various end-users lists to be adopted by CARICOM member states.
Prohibited end-users are either individuals or entities. Annex 2 of the draft model Act proposes three lists that may be adopted by CARICOM member states as prohibited end-users list. The three lists are: 1) consolidated UNSC sanctions list; 2) prohibited end-users list in the second schedule under the Strategic Trade Act 2010 in Malaysia; and 3) consolidated list of persons, groups and entities subject to EU financial sanctions.
Restricted end-users are countries. Annex 3 of the draft model Act proposes three lists that may be adopted by CARICOM member states as restricted end-users list. The three lists are: 1) list of countries that are subject to sanctions by the UNSC sanctions committees; 2) restricted end-users in the first schedule under the Strategic Trade Act 2010 in Malaysia; and 3) countries listed in the restrictive measures in force in the EU. Annex 2 or 3 of the draft model Act does not suggest end-users list provided by the United States as there is no consolidated list available.