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EXPORT COMPLIANCE

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AGENDA

• Purpose

• Exporting Basics & Key Definitions

• Export Responsibilities

• Classifying, Labeling and Shipping products

• Automated Export System (AES)

• Penalties

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PURPOSE

• To be compliant with U.S. Laws. Non-compliance = high cost

• Provide exporting basics and describe the role of employees in an organization

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EXPORTING

• Department of State– International Traffic in Arms Regulations (ITAR) – U.S.

Munitions List– Military– Protects defense related information and items on the

U.S. Munitions List

• Department of Commerce– Commerce Control List– Dual Use

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DEFENSE ARTICLES

• Any article designed, built or modified for a specific military application

• Items located on the U.S. Munitions List (USML)

• Includes: technical data recorded or stored in any physical form, models, or mockups or other items that reveal technical data directly related to the USML

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FOREIGN PERSON

• Any person who is not a lawful permanent resident as defined by 8 U.S.C. 1101 (a)(20) or who is not a protected individual as defined by 8 U.S.C. 1324b (a)(3)

• Includes: Non – U.S. citizen employees of a U.S. company, as well as foreign national employers of overseas offices. Transfer of defense articles/services/data to these individuals requires prior written government approval

• Includes: Foreign corporations, business associations, partnerships, trust, society or any other entity or group that is not incorporated or organized to do business in the U.S., as well as international organizations, foreign governments, and any agency or subdivision of foreign governments

• An organization’s affiliate/subsidiary, located outside of the U.S., is considered a foreign company under ITAR

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DUAL USE

• Technical data or hardware which can be used interchangeably for both military and commercial applications

• Built with no particular military function, but may have a potential military application

• Example: computer, jeeps, trucks, lighter aircraft

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WHAT IS AN EXPORT?• Sending or taking a defense article out of the U.S. in any manner, except

by mere travel outside of the U.S. by a person whose personal knowledge includes technical data; or

• Transferring registration, control, or ownership to a foreign person of any aircraft, vessel, or satellite on the U.S. Munitions List, whether in the U.S. or abroad; or

• Disclosing (including oral or visual) of or transferring in the U.S. any defense article to an embassy, any agency or subdivision of a foreign government; or

• Disclosing (including oral or visual) of export controlled information (technical data or technology) to a Foreign Person in the U.S. or abroad

• Performing an ITAR controlled defense service for a foreign person, whether in the U.S. or abroad

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EXAMPLES OF EXPORTS

• Physical shipments across U.S. border

• Emails, faxes, phone calls to foreign persons

• Hand carrying papers or laptops containing technology overseas

• Demonstrations, meetings and training of foreign persons in the U.S. or abroad

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EXPORT RESPONSIBILITIES

• Export compliance is the responsibility of all employees and includes:

• Empowered Officials• Technical Staff• Licensing Administrators• Property

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RESPONSIBILITIES OF TECHNICAL STAFF

• Prior to exchanging information, shipping hardware or entering into an agreement with a foreign company or person, contact the individual responsible for export compliance in your company (i.e. Licensing Administrator)

• Provide Licensing Administrator with the Statement of Work or description of discussions to be held with foreign consultants or organizations. Licensing Administrator will review the U.S. Munitions List and the Commerce Control List and provide direction

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LICENSING ADMINISTRATOR RESPONSIBILITIES

• Review the SOW or discussions topics and categorize into one of the following:

a) U.S. Munitions Listb) Commerce Control Listc) Commercial

• Notify PM/Requestor via email of licensing determination.

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EMPOWERED OFFICIALS

• Responsible for ensuring company wide compliance with all U.S. Government rules and regulations

• The organization’s signature authority with the Government (Executive Management)

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PROPERTY

• Needs to be aware of international shipping requirements

• Follow your organization’s policy and procedures for shipping international packages.

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CLASSIFYING, LABELING AND SHIPPING

• Classifying - Each shipment that is sent internationally must be identified as ITAR, Commerce or commercial by the Licensing Administrator.

• Labeling - Once an item is properly classified, it must be labeled. To ship an item outside the country that falls under ITAR or Commerce, a license or an exemption is required.

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CLASSIFYING, LABELING AND SHIPPING

• License – Utilized for export of hardware and/or specific identifiable documents; discussion of those documents without elaboration

• Exemption – Allows export without a license or agreement

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CLASSIFYING, LABELING AND SHIPPING

• Best practice is to use a trusted freight forwarder to send the international shipment.

• It is important to use a trusted freight forwarder, because any mistake they make in filing paperwork or dealing with customs is a reflection of your company and you can still be fined for their mistake.

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Automated Export System (AES)

• System used by U.S. exporting to electronically declare international exports to the Customs and Border Patrol (CBP) for both ITAR and Commerce.

• Any item located on the U.S. Munitions List must be filed via AES prior to shipment regardless of dollar value.

• http://www.aesdirect.gov/

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PENALTIES

• Penalties for failure to comply with U.S. Export Controls are:

a) Heavy Finesb) Loss of Security Clearancesc) Imprisonmentd) Revoking of Export Privilegese) Debarmentf) Customs seizing shipment

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PENALITIES (Cont.)

• Recent ITAR violation fines:a) Raytheon - $25 million b) Lockheed Martin - $13 million c) Boeing - $15 million – article attached in appendixd) ITT - $100,000,000 – article attached in appendix

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PENALTIES (Cont.)

• An individual may be fined up to $1 million, imprisoned up to 10 years, or both

• Organization may be denied export privileges and fined $1 million for each offense

• Organization may be denied the privilege of doing business with the U.S. Government

• Organization might incur substantial negative publicity

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SUMMARY

• Export compliance is the law

• Follow your organization’s policies and procedures in regards to export compliance.

• If you have any questions, contact your organization’s representative who handles export compliance issues for further guidance.

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THANK YOU FOR ATTENDING

ANY QUESTIONS?