Case No. SY-2017-341037-1
[***]
1455 Pennsylvania Ave., NW
Suite 400
Washington, DC 20004
Dear Mr. [***]:
This is in response to your request of March 16, 2017 on behalf of Cochlear Limited and its associated subsidiaries (collectively, “Cochlear”) (the “Application”), to the Office of Foreign Assets Control (OFAC), requesting authorization for the export, sale, and servicing of various hearing implants, related medical equipment, and associated parts and accessories (collectively “Medical Devices”) in Syria. According to the Application, Cochlear requests authorization for U.S. persons to be involved in the export to Syria of hearing implant-related devices, which have been authorized by the U.S. Department of Commerce. You explain that Cochlear further requests authorization for U.S. persons to engage in services related to the export in the following categories: 1) repair and warranty services; 2) clinical technical support and quality assurance services; 3) product management and market support services; and 4) services related to training medical professionals in Syria.
The Syrian Sanctions Regulations, 31 C.F.R. Part 542 (SySR), block all property and interests in property of the Government of Syria. SySR, § 542.201(a)(1). The SySR also prohibit the exportation, reexportation, sale, or supply, directly or indirectly, from the United States, or by a U.S. person, wherever located, of any services to Syria. SySR, § 542.207. Furthermore, the SySR prohibit U.S. persons, wherever located, from approving, financing, facilitating, or guaranteeing a transaction by a foreign person where the transaction by that foreign person would be prohibited by, in relevant part, section 542.207 of the SySR, if performed by a U.S. person or within the United States. SySR, § 542.210. The SySR define the term U.S. person to mean any United States citizen, permanent resident alien, entity organized under the laws of the United States (including foreign branches), or any person in the United States. SySR, § 542.319.
Section 542.510 of the SySR authorizes the exportation or reexportation of items from the United States or by a U.S. person, wherever located, to Syria, or to any person whose property and interests in property are blocked pursuant to the SySR, and all transactions ordinarily incident thereto, provided that the exportation or reexportation of such items to Syria is licensed or otherwise authorized by the U.S. Department of Commerce. In addition, the exportation, reexportation, sale, or supply, directly or indirectly, from the United States or by a U.S. person, wherever located, to Syria, including to the Government of Syria or any other person whose property and interests in property are blocked pursuant to section 542.201(a), of services that are ordinarily incident to the exportation or reexportation of items to Syria, or of services to install, repair, or replace such items, is authorized, provided that the exportation or reexportation of such items to Syria is licensed or otherwise authorized by the Department of Commerce. SySR, § 542.510
Based on the information provided in the Application, U.S. persons would be authorized under the aforementioned general licenses to export EAR99 medical devices to Syria and to install, repair, or replace such medical devices. It is OFAC’s policy not to grant applications for specific licenses authorizing transactions to which the provisions of an outstanding general license are applicable. See 31 C.F.R. § 501.801(a). In reference to the activities described in the Application, it appears that 1) repair and warranty services; and 2) direct clinical technical support, such as support provided during surgical implantation of the medical devices, and services related to quality assurance fall within the scope of the general license in section 542.510 of the SySR. However, hosting a question and answer website, that provides services beyond those necessary to install, repair, or replace medical devices, appears to be outside the scope of section 542.510. To the extent that any marketing materials are already fully created and in existence the exportation of such materials would be exempt from the SySR pursuant to section 542.211; however, please note that the creation of such materials to be exported to Syria does not fall within the scope of the exemption. To the extent the materials are not fully created and in existence, your request for product management and market support services appear s to fall outside the scope of the aforementioned general license. Finally, based on the limited information in the Application, it appears that the training services described in the application include training distributors to achieve the best outcome of the medical devices, fall outside the scope of the general license at section 542.510. It would inconsistent with current OFAC policy to authorize activities involving U.S. persons, that fall outside the scope of the general license at section 542.510 or the exemption at section 542.211.
If you have any questions or require additional information concerning this case, please contact the Licensing Division at (202) 622-2480.
Sincerely,
[***]
Date
Davin J. Blackborow
Assistant Director for Licensing
Office of Foreign Assets Control
1) As described in the guidance letter, 542.207 prohibited all the exportation of all “services” to Syria, while 542.510(b) authorized the “exportation, reexportation, sale, or supply, directly or indirectly, from the United States or by a U.S. person, wherever located, to Syria…of services that are ordinarily incident to the exportation or reexportation of items to Syria, or of services to install, repair, or replace such items…” Notably, this authorization is broader than all transactions ordinarily incident to underlying exports; the “services to install, repair, or replace” authorization extends beyond that which “ordinarily incident” covers where “install, repair, or replace” is not specified. The guidance request involves the following activities related to items described in 542.510(b): “1) repair and warranty services; 2) clinical technical support and quality assurance services; 3) product management and market support services; and 4) services related to training medical professionals in Syria.”
OFAC determines that “1) repair and warranty services; and 2) direct clinical technical support, such as support provided during surgical implantation of the medical devices, and services related to quality assurance fall within the scope of the general license in section 542.510…” The “direct clinical technical support” is likely covered by “install” in “install, repair, or replace”. For the “services related to quality assurance,” it is not clear whether this requires the “install, repair, or replace” language, or would be covered as “ordinarily incident” to the underlying export, but either way the determination is useful for the interpretation of ITSR and other ag/med GLs that cover “install, repair, or replace,” in particular 560.540(a)(7). 560.530 authorizes services necessary for the “operation, maintenance, and repair of medical devices,” and the guidance here appears relevant for the interpretation of that GL as well “operation, maintenance” seems as if it is at least as broad as “install”.
With respect to “hosting a question and answer website, that provides services beyond those necessary to install, repair, or replace medical devices, appears to be outside the scope of section 542.510,” the implication here appears to be that hosting the website is authorized so long as it is limited to answering questions “necessary to install, repair, or replace medical devices”.
The letter is also notable for the determination that “training services described in the application include training distributors to achieve the best outcome of the medical devices, fall outside the scope of the general license at section 542.510.”