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Differences between export & import regulation?
Imports: Widespread; purposes - raise revenue, protect domestic industries
Exports: Not very onerous (some exceptions); main purpose - national security concerns; prevent products/tech from being used in bad ways by bad people/countries
Exports: Not very onerous (some exceptions); main purpose - national security concerns; prevent products/tech from being used in bad ways by bad people/countries
What are the 4 Export Control Regimes?
1. Dual Use controls (civil + Military purpose) - DOC, BIS
2. Defense trade controls (not covered in class) - Dept of State
3. Economic/trade sanctions (not covered in class) - Dept of Treasury, OFAC
4. Anti-Boycott Laws: Dept of Commerce
2. Defense trade controls (not covered in class) - Dept of State
3. Economic/trade sanctions (not covered in class) - Dept of Treasury, OFAC
4. Anti-Boycott Laws: Dept of Commerce
What are the potential penalties for dual use violations?
Notes: One incident may be multiple violations. Don't need to show intent.
- Criminal: Up to 20 years in jail; fines - $250k or 2x the transaction
- Suspension of export privileges
- Criminal: Up to 20 years in jail; fines - $250k or 2x the transaction
- Suspension of export privileges
What are some mitigating factors for a company that has violated dual use registration requirements?
- Voluntary self-disclosure
- Internal compliance programs
- Internal compliance programs
What are dual use goods and who regulates them?
Dual use goods: Item having both a military (security) and civilian use
Regulated by the BIS in the Dept of Commerce
Regulated by the BIS in the Dept of Commerce
What does a dual use good require?
Dual use good requires a license to EXPORT certain items to specific companies. (Doesn't apply to imports)
3 STEPS IN NAVIGATING DUAL USE CONTROL REGIME
1. Is the good subject to EAR (Export Admin Regs)? Critical question - is it a US good? If not EAR, no license needed.
2. If it's EAR, try to find it on the CCL (Commerce control list): If not on CCL, it's Ear99, may still be subject to "end user controls"
3. If on CCL, consult Commerce Country List to see if exports of EAR good to that country are regulated; (denied person/entity test)
2. If it's EAR, try to find it on the CCL (Commerce control list): If not on CCL, it's Ear99, may still be subject to "end user controls"
3. If on CCL, consult Commerce Country List to see if exports of EAR good to that country are regulated; (denied person/entity test)
How do you determine if something is an EAR good?
- Did the good originate in the US (even if it is located outside the US)?
- US regs follow US goods around the world & apply to re-exported goods
- Does it contain a NON-TRIVIAL amount of US origin parts or materials?
- Is it based on US-origin tech or software?
- Is it currently located in the US?
- US regs follow US goods around the world & apply to re-exported goods
- Does it contain a NON-TRIVIAL amount of US origin parts or materials?
- Is it based on US-origin tech or software?
- Is it currently located in the US?
How is a good classified under EAR? (What is the numerical code?)
First number - category
Next digit - letter - narrower category
3 digits after - specific good
Next digit - letter - narrower category
3 digits after - specific good
Reasons for EAR controls
- Crime control, firearms/missile control, national security, goods in short supply, regional stability
- You can use the EAR code to find out what the reasons are. Then, look at commerce country chart to see if there's a check in a column for one of these reasons.
- You can use the EAR code to find out what the reasons are. Then, look at commerce country chart to see if there's a check in a column for one of these reasons.
What is an EAR99 good and what does it require?
- Ear99 Good: Ear goods that aren't listed on the CCL
- EAR99's aren't subject to export licensing but you still need to verify whether end-use(r) controls apply
- ENTITY LIST - Universities, gov't owned labs, private corps involved in web-MD's or other anti-US activities (you may still be able to get a license)
- DENIED PERSONS list
- UNVERIFIED list (red flag)
- END-USE controls list
- EAR99's aren't subject to export licensing but you still need to verify whether end-use(r) controls apply
- ENTITY LIST - Universities, gov't owned labs, private corps involved in web-MD's or other anti-US activities (you may still be able to get a license)
- DENIED PERSONS list
- UNVERIFIED list (red flag)
- END-USE controls list
What is an end use restriction?
If you know or have reason to know that your item will be used to support a proliferation activity, such as nuclear, chemical/biological, or missile proliferation activities, you need to get a license even if it's ear99
How can you make sure that you're not sending an export to someone shady who might use them for an end use that violates EAR?
Know your customer. Red flags:
- similar to a party on BIS denied party list
- reluctant to offer info about end-use
- Products capabilities don't fit the buyer's line of business
- item incompatible w/ technical level of country where it's going
- Willing to pay cash for very expensive item when terms of sale would normally call for financing
- Customer has little/no business background
- similar to a party on BIS denied party list
- reluctant to offer info about end-use
- Products capabilities don't fit the buyer's line of business
- item incompatible w/ technical level of country where it's going
- Willing to pay cash for very expensive item when terms of sale would normally call for financing
- Customer has little/no business background
What is a "deemed export"? How does it happen?
- Deemed export: Any release of technology /source code subject to the EAR to a foreign national is DEEMED to be an EXPORT to the home country of the foreign national
- Release - visual inspection of equipment/facilities; oral exchange of info; application to situations broad of personal knowledge or technological experience acquired in the US
- Release - visual inspection of equipment/facilities; oral exchange of info; application to situations broad of personal knowledge or technological experience acquired in the US
Do I need a license to export US-Manufactured straight jackets to Russia? To Iran? To Canada?
(How would you solve this problem?)
(How would you solve this problem?)
1. It's subject to EAR b/c it's US-manufactured.
2. Look at CCL for a numerical entry that covers it. (if not, Ear 99 - just check end use/end user controls)
3. Then, check Commerce Country List to see if you need a license to export it to the various countries.
2. Look at CCL for a numerical entry that covers it. (if not, Ear 99 - just check end use/end user controls)
3. Then, check Commerce Country List to see if you need a license to export it to the various countries.