U.S. Export Control Essentials
In Part 1 of our six-part education series on U.S. Export Controls, we covered the
What?
Who?
Why?
Where?
When?
How?
of U.S. controls.
We also explain the authorities’ understanding of export controls and elaborate on essential definitions.
We give an overview of the Export Administration Regulations (‘EAR’) implemented by the Bureau of Industry and Security (‘BIS’), which is part of the US Department of Commerce, and the International Traffic in Arms Regulations (‘ITAR’), administered by the Directorate of Defense Trade Controls (‘DDTC’), a division of the US Department of State.
This blog entry is a summary of the 90-minute educational webinar, aimed to assist learners in capturing the key points of the learning.
What are Export Controls
We discussed Export controls are restrictions imposed by governments on the tangible and intangible movement of certain
Goods
software and
technology
and on the provision of technical assistance related to controlled items and other restrictions on trade.
Reasons for U.S. Export Controls
Protecting national security
Implementing and supporting foreign policy objectives
Preventing the proliferation of weapons of mass destruction (“WMD”)
Protecting human rights
Addressing economic and short supply concerns; and
Combating terrorism
For companies
Denial of export privileges
Fines
Prison
Reputational damanage
Scope of U.S. Export Controls
WHERE and WHERE TO: Place of export & Destination
Every person in the US including a national of any other country, is subject to US export controls
Every item in the US, including EU or elsewhere made item, is subject to US export controls
WHO: Nationality of the exporter, parties to the export
A US national or a US company is subject to US export controls, even when all export activities occur outside US
May also be subject to the local country’s export controls
WHAT: Origin of the goods and/or technology
US origin items remain subject to US controls even after they leave the US and even after incorporation into a product in another country
May also be subject to the local country’s export controls
Authorities
The International Traffic in Arms Regulations (ITAR) is managed by the State – United States Munitions List (USML) it is primarily focused on defense articles.
The Export Administration Regulations (EAR) is managed by the department of commerce – Commerce Control List (CCL) it controls less sensitive defense items and dual-use items
What do both regulate?
While the control lists are different, the ITAR and the EAR both regulate:
Export
Import
Reexport
Retransfer
These activities can involve:
Hardware
Software
Technical data
Technology
Other services depending on the transaction.
Both regulate U.S.-origin items wherever located, as well as U.S.-origin items incorporated into foreign-made items, wherever they are located, under certain conditions.
They also regulate the provision of certain services by U.S. persons to foreign persons in the United States and abroad.
What are the Export Administration Regulations?
Administered by U.S. Dept. of Commerce, Bureau of Industry and Security (BiS) Controls export and re-export activities of certain products
Many products controlled under EAR are classed as ‘Dual-Use’ but it also controls some military items and items which are purely commercial
An export licence may be required from the US authorities, this is dependant on the item, destination, end-user and end-use. There are numerous licence exceptions within the EAR.
No authorisation required for imports into the US
Regulated activities: Key Definitions
Export
Shipment from the US to a non-US location of hardware, software & technology/technical data
Re-export
Exports from one non-US location to another of US-origin hardware, software & technology
In-Country Transfers
Movements of US-origin hardware, software & technology within a country
Deemed export and re-exports
Release of technology/technical data to Non-U.S. persons in the US or “third” country nationals/persons outside the US is a deemed reexport to the persons home country
Re-exports or Transfers of non-US origin items
Non-US made products with US-origin content or produced using US technical data.
Facts about your transaction
The following five types of facts determine your obligations under the EAR and will be of help to you in reviewing these steps:
(1) What is it?
What an item is, for export control purposes, depends on its classification, which is its place on the Commerce Control List (see part 774 of the EAR).
(2) Where is it going?
The country of ultimate destination for export or reexport also determines licensing requirements (see parts 738 and 774 of the EAR concerning the Country Chart and the Commerce Control List).
(3) Who will receive it?
The ultimate end-user of your item cannot be a bad end-user. See General Prohibition Four (Denial Orders) in §736.2(b)(4) and parts 744 and 764 of the EAR
(4) What will they do with it?
The ultimate end-use of your item cannot be a bad end-user.
See General Prohibition Five (End-Use EndUser) in §736.2(b)(5) and part 744 of the EAR for general end-use and end-user restrictions.
(5) What else do they do?
Conduct such as contracting, financing, and freight forwarding in
support of a proliferation project (as described in §744.6 of the EAR) may prevent you from dealing with someone.
LINKS
Authorities
BLOGS
U.S. Export Controls encryption experts simplified: https://www.customsmanager.org/post/less-paperwork-as-us-bis-simplifies-reporting-requirements
China issues Dual Use Lists! + Detailed Export Control Webinar https://www.customsmanager.org/post/exclusive-content-for-plm-subscribers-china-export-control-webinar
US Export Control violations: German SAP settles with OFAC for $2 million Export Control violations: German SAP settles with OFAC for $2 million
https://www.customsmanager.org/post/us-sanctions-violations-sap