navigating the export licensing process & establishing an export management & compliance...

Navigating the Export Licensing Process

&

Establishing an Export Management & Compliance Program

Presented by Robert StackpoleSr. International Trade Specialist

• Who• What• Where • For What Use

Questions

Where Are You Exporting?

Determine Whether your Product Requires a License for the Destination

• Compare Reason for a License to the Country Commercial Chart

• If an ‘X’ Appears in Country’s Column for your Product, then a license is Required

What are you exporting

• Determine Jurisdiction• Determine if Product/Service is on the USML or the

CCL• Determine Exemptions/Exceptions

Where Are You Exporting?

To Whom Are You Exporting?

Certain individuals and organizations are prohibited from receiving U.S. exports, and others may only receive goods if they have been licensed.

See “Lists to Check” on BIS Website• Entity List• Specially Designated Nationals• Denied Persons• Unverified

What is the End Use?

Some end-uses are prohibited while others may require a license.

• EXAMPLE: You may not export to certain entities involved in the proliferation of weapons of mass destruction (e.g., nuclear, biological, chemical) and the missiles to deliver them, without specific authorization, no matter what your item is.

Regulations EAR & ITAR

• US Department of State-MilitaryUS Department of State-Military• Law- AECALaw- AECA• Directorate of Defense Trade Controls (DDTC)Directorate of Defense Trade Controls (DDTC)• International Traffic in Arms Regulations-ITARInternational Traffic in Arms Regulations-ITAR• - US Munitions List- USML- US Munitions List- USML

• US Department of CommerceUS Department of Commerce• Law- EAA (IEEPA)Law- EAA (IEEPA)• Bureau of Industry and Security (BIS)Bureau of Industry and Security (BIS)• Export Administration Regulations- EARExport Administration Regulations- EAR• - Commerce Control List- CCL- Commerce Control List- CCL

U.S. Munitions List

• I. Firearms, Close Assault Weapons and Combat Shotguns• II. Guns and Armament• III. Ammunition /Ordnance• IV. Launch Vehicles, Missiles, Rockets, Torpedoes, Bombs and Mines• V. Explosives and Energetic Materials, Propellants, Incendiary Agents• VI. Vessels of War and Special Naval Equipment• VII. Tanks and Military Vehicles• VIII. Aircraft and Associated Equipment• IX. Military Training and Equipment• X. Protective Personnel Equipment and Shelters• XI. Military Electronics

U.S. Munitions List

• XII. Fire Control, Range Finder, Optical and Guidance and Control Equipment• XIII. Auxiliary Military Equipment• XIV. Toxicological Agents, Including Chemical and Biological and Equipment• XV. Spacecraft Systems and Associated Equipment• XVI. Nuclear Weapons, Design and Testing Related Items• XVII. Classified Articles, Technical Data and Defense Services Not Otherwise

Enumerated• XVIII. Directed Energy Weapons• XIX. [Reserved]• XX. Submersible Vessels, Oceanographic and Associated Equipment• XXI. Miscellaneous Articles

NEXT STEP for ITAR

1. Register with the Directorate of Defense Trade Controls- http://www.pmddtc.state.gov/

2. Submit for License through D-TRADE3. Request Official Commodity Jurisdiction Request if

not sure4. Cost- $2250 for First Tier

Commodity Jurisdiction Request

• The Answer is Binding• Decision will be: ITAR or EAR controlled or Split Decision• A bad request will equal bad answer: RWA or Wrong

Determination• KEY- Prove item was not designed specifically for military use

and has predominant civil use• Applying for ITAR export license does not prejudice CJ

determination• If you disagree with the results: Appeal or Request

Reconsideration

Mitigate Your Risk

Implement an Export Compliance & Management Program (EMCP)

Export Management & Compliance Program

• An EMCP is a program that helps ensure that each export is treated consistently and in compliance with U.S. export regulations.

• The key is to tailor an EMCP to individual company operations and activities.

Export Management Compliance Program

• Comply with all Regulatory Requirements for Exporting• Corporate Commitment and Policy for Export Compliance• Identification of Responsible Parties within Company• Understanding and Awareness of Regulations and Training• Identification and Tracking of controlled data and goods• Screening Mechanism to identify denied parties and

destinations• Record Keeping Policy and Procedure for export control• Identification and Disclosure of Violations

Why an EMCP?

• Provides structure & organization for the processing of export transactions.

• Protects employees from inadvertently violating U.S. export law.

• Protects your company against export control violations through implementing an ongoing compliance program.

WARNING!

WARNING!

• The establishment of an EMCP, in and of itself, will NOT relieve an exporter of criminal and administrative liability under the law if violation occurs.

• Companies and/or employees who act contrary to the Export Administration Regulations could lose their export privileges, be fined, or even be criminally prosecuted.

Why Should a Company Care?

Fines & Penalties for Export Violations

FY 2006 BIS Investigations Resulted in:FY 2006 BIS Investigations Resulted in:

- 33 Criminal Convictions33 Criminal Convictions

- Monetary Fines of $3 Million Monetary Fines of $3 Million

- Admin Fines Totaling $13 MillionAdmin Fines Totaling $13 Million

- 33 Export Denial Orders33 Export Denial Orders

““Don’t Let This Happen to You”Don’t Let This Happen to You”

So I need an EMCP…How do I Start?

Basic EMCP Structure has Three Components:

Component 1: Administrative (6 Elements)

Component 2: Order Processing (1 Element)

Component 3: Screening (8 Elements)

Component 1: Administrative Elements

Administrative ElementsManagement CommitmentResponsible OfficialsRecord KeepingTrainingInternal ReviewsNotification

Component 2: Order Processing

Create a comprehensive chart depicting the order process flow in your company.

1) Describe your company’s order processing system from start to end.

2) Identify where export compliance vulnerabilities might occur.

3) Implement systems to prevent violations.

Component 3: Screening Elements

Screening ElementsDenied Persons ScreenProduct/Licensing ScreenDiversion Risk ScreenNuclear ScreenMissile ScreenChemicals & Biological Weapons ScreenAnti Boycott Screen Informed Letter / Entity List Screen

EMCP Best Practices

• Up to this point we’ve seen the recommended EMCP guidelines from the Bureau of Industry & Security.

• In addition to those guidelines several EMCP Best Practices were highlighted in the 2000 Nunn-Wolfowitz Report…

Example: Compliance Manual Table of Contents

• Management & Compliance Policies• Classification• Order Processing• Screening• Accountability• International Traffic in Arms Regulations• Glossary

EMCP Common Problems

• Identifying Improper Jurisdiction of Items;• Lacking Ownership of Responsibility by all Employees;

– This is not just the Export Manager’s responsibility• License Management;

– Distribution of license; Proviso Management; Submission of document to USG; Management of Scope of License; Review of Parties against Denied Parties Lists; Expiration of Licenses; etc…

• Improper use of Exemptions;• Lack of Proper Record Keeping

EMCP Online Resources

• BIS: Export Management System Guidelines– http://www.bis.doc.gov/ExportManagementSystems/EMSGuidelines.html

• DDTC: Guidelines for Exporters Registered w/ State– http://www.pmdtc.org/docs/Compliance_Programs.pdf

• Nunn-Wolfowitz Report (EMCP Best Practices)– http://www.kslaw.com/library/pdf/nunnwolfowitz.pdf

Thank You!

Robert Stackpole

Senior International Trade Specialist

Phone: 205-731-1333 Robert.Stackpole@trade.gov