malcolm budd bsc (law) mcips senior export control manager ... · malcolm budd bsc (law) mcips ......
Post on 18-Aug-2020
6 Views
Preview:
TRANSCRIPT
Malcolm Budd BSc (Law) MCIPS
Senior Export Control Manager (Corporate)
Rolls-Royce plc
16th August 2011
Why have Export Controls?
Structure and Incorporation
Penalties for Non-Compliance
Military & Dual-Use Control Lists
Overview of UK Export Control Regulations
Overview of US Export Control Regulations
Other Significant Regimes
How Export Controls Impact Purchasing
Question & Answer Session
Summary
Christopher Tappin, 64, of Orpington, Kent
Accused of conspiring to sell parts for
Iranian missiles, and is fighting extradition
to the USA
Mr Tappin said he believed he was
exporting batteries for the car industry in
the Netherlands.
If convicted, he faces 35 years in prison.
The Iraqi Supergun and Matrix-Churchill
Arms-to-Iraq affair concerned the uncovering of
the government-endorsed sale of arms by British
companies to Iraq..
Four directors of the British machine tools
manufacturer Matrix Churchill were put on trial for
supplying equipment and knowledge to Iraq.
In 1992 the trial collapsed, as it was revealed that
the company had been advised by the government
on how to sell arms to Iraq. Several of the directors
were eventually paid compensation
As one of the other directors claimed to have been working for the British intelligence services, the
Ministry of Defence advised Matrix Churchill on how to apply for export licences of materials that
could be used to make munitions in such a way that would not attract attention.
Tools used by NATO and ‘friendly’ countries to ensure trade is conducted securely ◦ i.e. to prevent certain equipment and technology ending up in the wrong hands
and contributing to acts of aggression, cruelty or proliferation of WMD
The means by which governments control the movement of strategic goods and technology between countries and people which affect the security interests of national or international objectives of the country
All products and technologies are subject to: ◦ National export controls of the countries in which you operate; AND
◦ ‘Extra-territorial’ Export Controls of the USA.
Controls apply to: ◦ Conventional Arms & Weapons; and
◦ Vehicles & components that carry them; and
◦ Other equipment that could have Military use; and
◦ Otherwise ‘civil’ items in relation to specified End Users; and
◦ The flow of money
Rolls-Royce data-strictly private
It is the Law !
Penalties for non-compliance are extremely serious:
◦ Loss of licences or ability to use Open Licences
◦ Hardware seized
◦ Unfavourable press & damage to reputation;
◦ US Denied Parties list – company, company director and individual
◦ Financial – fines
Loss of trade
impact on profit margins;
◦ Personal imprisonment.
Rolls-Royce data-strictly private
• WHAT is being exported?
• WHERE it is being exported between?
• WHO it is being exported between?
• WHY it is being exported?
• HOW it is being exported?
• WHEN and FOR WHAT it is being exported?
• HOW MUCH/MANY is being exported?
International Agreements govern lists of Military & Dual Use items subject to Control: e.g. ◦ Wassanaar Arrangement
◦ Australia Group (Chemical Weapons)
◦ Nuclear Weapons Group
◦ Missile Technology Control Regime
◦ Chemical Weapons Convention
EU and National Governments incorporate these into law ◦ Military Lists
◦ Dual Use Control Lists
◦ End Use Controls
National variations in application of Regulations
National variations in perception of different destination countries
Company policy may enforce additional restrictions
Governments produce lists
◦ Lists of controlled goods and technology
◦ Lists of countries
◦ Lists of companies and individuals
◦ Lists of controlled purposes
◦ Lists of export processes
Exports that meet certain combinations of these lists must be authorised by the regulatory bodies prior to the export taking place
Exports that require approval are illegal if there is no approval or if they do not comply with the approval.
• Goods and technology designed or modified by fit, form or function for military applications
• ML6 – Ground vehicles
• ML7 – Chemical or biological toxic agents
• ML9 – Vessels of War
• ML10 – “Aircraft” & Aero-Engines
• ML11 – Electronic Equipment
• ML16 – Forgings, castings and other unfinished “goods”...
• ML18 – Production equipment and components
• ML20 – Cryogenic and “superconductive” equipment
• ML21 – Software
• ML22 – “Technology” ...which is required for the development,
production or use of goods or software elsewhere in ML
Items designed originally for commercial use but which could have a military application (but not modified for military use) and as defined by specific performance criteria in the Control Lists
Does not mean ‘goods that are used in both Civil and Military’
PLUS
Any item or technology which you believe or know may be used for or associated with Weapons of Mass Destruction (WMD – chemical, biological or nuclear) purposes
Category
0 –Nuclear Materials,
Facilities &
Equipment
1 –Special Materials and
Related Equipment
2 –Materials Processing
3 –Electronics
4 –Computers
5 –Telecommunications
& Information
Security
6 –Sensors & Lasers
7 –Navigation &
Avionics
8 –Marine
9 –Aerospace &
Propulsion
Sub-Category
A – Systems, Equipment & Components
B – Test, Inspection & Production Equipment
C – Materials
D – Software
E – Technology
Regime Origin
0 –Wassenaar Arrangement
1– Missile Technology Control Regime
2– Nuclear Suppliers Group
3– Australia Group
4– Chemical Weapons Convention
6A203a
Mechanical rotating mirror cameras, as follows, and specially
designed components therefor: 1. Framing cameras with
recording rates greater than 225000 frames per second. 2.
Streak cameras with writing speeds greater than 0.5 mm …..
Item’s individual entry code
‘DUAL-USE’ ITEMS – CONTROL ENTRY EXAMPLE
Exports meeting criteria on Control Lists require authorisation through an Export Licence by the regulatory body prior to the export taking place
Controlled exports are illegal if there is no Export Licence or if they do not comply with the terms of the Export Licence
Specific information necessary for the development, production or use of goods or software. This information takes the form of:
◦ ‘Technical Data’
◦ ‘Technical Assistance’
So an RFQ with a Technical Specification for a component, (or a casting/forging for a component), is likely to contain technology and would therefore need to be rated and highlighted as such if ‘controlled’
US laws also control bill-of-material information
Examples of Technical Data
Blueprints
Specifications
Test data
Operation / use manuals
Plant tours
Performance data
Overhaul manuals
Instructions
CAD files
Software
Maintenance manuals
Photographs
Service bulletins
Source code
CDs – Data Disks
Export Control Organisation (ECO) in the Department for Business, Innovation and Skills (BIS)
Advised by: ◦ Foreign and Commonwealth Office
◦ Ministry of Defence
Further information is available on the ECO pages of ‘BusinessLink’
Due Diligence
It is the responsibility of the exporting party to ensure that all export regulations are followed. This includes:
Controlled items are exported legally against a valid license, agreement, exemption or exception.
The exporting party has performed reasonable care to ensure that the customer is legally entitled to receive the exported goods.
SIEL = Standard Individual Export Licence ◦ Nominated Recipient in One Nominated Country
◦ Capped by Value & Volume
◦ Valid for 2 years maximum
◦ Requires EUU revalidated annually
OIEL = Open Individual Export Licence ◦ Multiple Recipients in Multiple Countries
◦ No cap on Value or Volume
◦ Valid for 5 years maximum
◦ Requires EUU revalidated annually
OGEL = Open General Export Licence ◦ Around 40 in circulation
◦ Used for Military Goods & Technology
◦ Each OGEL lists countries valid for export
◦ ‘Open’ – need to register not apply each time
◦ Subject to detailed annual audit by BIS ECO
◦ Mandatory Record Keeping Requirements
◦ Requires current EUU revalidated annually
◦ OGEL: Technology for Military Goods
◦ OGEL: Dual Use Goods
◦ Customs Free/Special Economic Zones
Exports of Dual Use Goods & Technology not licensable within EU
Community General Export Authorisation EU001 ◦ Australia : Canada : Japan : New Zealand : Norway
Switzerland : USA
‘Brokering’
‘End Use’ Trade Controls
Iran and other countries
Licences may be amended, suspended or revoked by the UK Secretary of State or EU Commission at any time
Governments require EUU to support all Licence applications ◦ Renewable annually
◦ Mandatory Record-keeping
◦ Export Rating on all exports of Goods and Technology
◦ Goods: Logistics/Shipping responsibility?
◦ Technology: Personal responsibility?
◦ Corporate, team or personal record keeping systems
Suppliers & Customers becoming more aware!
UK PHYSICAL MOVEMENT OF DATA
ELECTRONIC TRANSFER OF DATA
EXPORT
EXPORT
PHYSICAL MOVEMENT OF GOODS
EXPORT
UK Accessing technology
relating to military
goods
EXPORT
EU UK
PHYSICAL MOVEMENT OF GOODS
PHYSICAL MOVEMENT OF DATA
ELECTRONIC TRANSFER OF DATA
NOT AN EXPORT
(generally)
PHYSICAL MOVEMENT OF GOODS
PHYSICAL MOVEMENT OF DATA
ELECTRONIC TRANSFER OF DATA
EXPORT
EU UK
Accessing
technology relating to
dual-use goods
Accessing
technology relating to
dual-use goods
NOT AN EXPORT
(generally)
EXPORT
Department of State
Arms Export Control Act
International Traffic In Arms Regs
(ITAR)
U.S. Munitions List
(USML)
Governs: Military / Defense Items, Data
& Services
Department of Commerce
Export Administration Act
Export Administration Regulations
(EAR)
Commerce Control List
(CCL)
Governs: Everything Else
(non-military & dual use)
Department of StateDepartment of State
Arms Export Control Act
International Traffic In Arms Regs
(ITAR)
U.S. Munitions List
(USML)
Governs: Military / Defense Items, Data
& Services
Department of CommerceDepartment of Commerce
Export Administration Act
Export Administration Regulations
(EAR)
Commerce Control List
(CCL)
Governs: Everything Else
(non-military & dual use)
Controls the transfer of Goods, Technology, Software and Defence Services designed, developed and/or modified for military use from a US Person to a Foreign Person wherever in the world
Controls items on the US Military List (USML)
Advised by the Department of Defence
Principle types of US ITAR Export Authorisations: • DSP-5 - ITAR-controlled Goods or limited ‘Technology’
• TAA - Technical Assistance Agreement authorised by the US DoS
• MLA - Manufacturing Licence Agreements
• WDA - Warehouse Distribution Agreements
Controls the transfer of ‘Dual-Use’ and ‘Civil’ goods and technology
Controlled by the Export Administration Regulations (EAR)
• The listed controlled goods and technology require a Department of Commerce licence prior to export
• Non-controlled goods or technology rated NLR per EAR99
Countries Under Presumption of Denial
Case-by Case
Afghanistan
Cyprus
Iraq
Yemen
Zimbabwe
Dem Rep of the
Congo
Denial
Belarus Iran Somalia
Burma Ivory Coast Sri Lanka
China Lebanon Sudan
Cuba Liberia Syria
Cyprus Libya Venezuela
Eritrea North Korea Vietnam
Haiti Sierra Leone
* Red denotes nations known to be supporting terrorism.
US Export Controls are “extra-territorial”
ITAR and EAR licences list the companies and organisations who may access the goods and/or the technical information ◦ TAA Sub-Licensees
ITAR and EAR licences often specify whether technical information can be accessed by permanent employees only (i.e. not ‘contract labour’)
‘Nationality’ issues ◦ Differences between ITAR and EAR
◦ Licences often specify the nationalities of the people authorised to access technical information
◦ Conflict with EU Anti-discrimination Law
The concept of “Deemed Export” and “Re-export”:
Principle of De Minimis in EAR
USA
PHYSICAL MOVEMENT GOODS/DATA
ELECTRONIC TRANSFER DATA
EXPORT
EXPORT
TECHNICAL ASSISTANCE
EXPORT
USA
US Person
(US Entity)
US Person
(US Entity)
US Person
(US Entity)
Foreign Person
(Non-US Entity)
Foreign Person
(Non-US Entity)
Foreign Person
(Non-US Entity) (Known as Sublicensing)
NOT AN EXPORT
EXPORT
RE-EXPORT
France
Singapore
China
Malaysia
Japan
US Embargoed Countries ◦ US Citizens cannot deal with them
◦ Any US-sourced products cannot be sold into these countries
◦ Affects Military & Dual-Use
China (IPR issues)
Armenia (diversion)
Mexico (leakage to highest bidder)
Dubai/Arab Free Ports
Customs Free / Special Economic Zones
Does the supplier understand Export Control?
◦ Compliance organisation
◦ Clear management responsibility
◦ Awareness Education vs Liability
Audit the supplier’s compliance processes
◦ Can they control US-controlled Technology to authorised persons?
◦ Compliance with Government Audits
What is the sub-tier supply chain
◦ Who are they? (Denied parties?)
◦ Where are they? (Authorised countries?)
◦ Do they need to be added to Licences?
2-speed supply chain?
Corporate Services (IT, Reprographics, Document Management)
What countries are you planning to source from?
Know your Customer Chain: ◦ Who are you selling on to?
◦ Who are the intermediaries/consignees?
Screening: Denied Countries, Companies or Persons
What Supplier Export Licence restrictions may you be subject to? ◦ Embargoed countries
◦ Nationality restrictions
◦ ‘Flow through’ restrictions
What Licences do you need to send Technical Data under RFQ to prospective Suppliers?
What End User Undertakings may need to be obtained and provided to Suppliers?
Provide the Supplier with the ‘Export Rating’ for the Goods you are sourcing or product it will be used on (End Use)
Determine the ‘Export Rating’ of the associated Technology
Supplier to provide the ‘Export Rating’ of Goods/Technology under their jurisdiction (if different)
Every document issued should state the ‘Export Rating’ of the system/component (even if NLR)
Request Export Rating of proprietary products from Suppliers.
Systems & repositories for collating ‘Export Rating’ data
Manufacturing Plans, Quality Plans, Concessions, etc are all potentially controlled
Lead Time & Planning
Management of Licence Conditions
Outbound Logistics ◦ What Licences do you need to ship goods
◦ Is there an exemption available
◦ Is a Licence already available
◦ Lead time for Licence applications
◦ ‘Stop shipment’ conditions
Inbound Logistics ◦ Security bonding
◦ Communication of Licence restrictions
Customer 3PL Providers???
Business Travel
All technology, regardless of medium
Ensure that you take only the technology required for the business trip
Ensure that the required authorisations are in place to cover the export of controlled technology prior to the trip
In the case of US ITAR-controlled technology, ensure all parties involved are included in a TAA before sharing technical information
Laptops and other media devices
IT security policy (China)
Comply with local procedures before taking such equipment out of the country
Accessing controlled data held on a server from an overseas destination is classed as an export.
Export compliance is business critical
Export compliance is mandatory and embodied in law
◦ Compliance is legal requirement
◦ Compliance is both personal and company responsibility
Impact of US Export Controls
All Purchasing staff are “Gatekeepers” to the supply chain
Be aware when you making an export of hardware, specifications and data
Be aware when you are talking to suppliers and contractors
Always err on the side of caution
Increasing compliance sought by Governments, customers and Suppliers
If you think you may need authorisation, STOP and ASK
What are you buying?
Is it subject to Export Controls?
Where is it going?
Who will receive it?
What will they do with it?
What else could they do with it?
top related