export compliance for canadian companies comp-oct… · export compliance for canadian companies...
TRANSCRIPT
supply chain & logistics
Export Compliance for
Canadian Companies
CITT Webinar Series
Date: Wednesday, October 19 2016
Time: 12pm EST
Hosted by: Kevin Riddell, CCLP
Presenter Info
• Kevin Riddell, CCLP
• Director, International Logistics
• Tremco Incorporated:
http://www.tremcoinc.com/
Agenda
• Canadian export controls
• US Extraterritorial concerns
• It’s not just “exports”
• Automation
Canadian Export Controls
• Export and Import Permits Act
• Economic sanctions
• Defense controls
• Other government agencies
Export and Import Permits Act
• Primary source of Canadian controls
• 2 key considerations:
– Export Control list (what?)
– Area Control list (where?)
Export Control List
• Comprehensive list of goods controlled for export
• Controls for various reasons: – Multilateral agreements (Wassenaar, Australia Group…)
– Canada specific controls
– Partnership with US
Export Control List
• What’s in it? (a lot)
Export Control List
• US origin goods special note
Export Control List
• US origin goods GEP-12 good news
Export Control List
• US origin goods GEP-12 bad news
Area Control List
• Whose on it?
• What does it mean?
Penalty Examples
Best Practices
• Check all of your products against the Export Control List
• Pay special attention to 5400 US origin rule
• Know the Area Control List
• Have formal processes documented
• Implement controls on affected products – automate if
possible
• Get executive buy in
Canadian Economic Sanctions
• UN driven sanctions (United Nations Act)
• Autonomous sanctions (Special Economic Measures
Act)
Canadian Economic Sanctions
• 3 primary groupings:
– Where (though less severe than US embargos)
– What (i.e. Arms)
– Who
Canadian Economic Sanctions
• Entity sanctions
Penalty Example
Penalty Example?
Best Practices
• Know the sanctions (Education)
• Review your products against any product specific rules
• Automate your entity screening
Other government agencies
• Guidance from Global Affairs Canada:
Penalty Example
Best Practices
• Research possible risk – what agencies control your
products?
• Education and networking are essential – get out there!
US Extraterritorial Concerns
• Export Administration Regulations
• ITAR
• Department of Treasury OFAC
• Don’t forget FEMA!
Export Administration Regulations (EAR)
• 15 CFR
• Main source of export control in commerce (“dual use”)
• Governs not just US exports, but exports of US goods or
by US technology
Export Administration Regulations (EAR)
• Read the General Prohibitions Carefully! (15 CFR 736)
Penalty Example
• Read This!
Penalty Example
Penalty Example
EAR Office of Antiboycott
ITAR
• US Military Goods Controls
• Not as wide ranging as EAR – specific to military
purpose goods
Department of Treasury OFAC
• Primary source of economic sanction for US government
• Application can be extraterritorial
• Can deny ALL activity with listed entity or country
• 2 main areas to review:
– Countries
– Entities (“SDN”s)
Department of Treasury OFAC
• Application concerns
• “US Person” (Example below is 31 CFR 560)
Department of Treasury OFAC
• Country concerns
• Some countries are “off limits” i.e. North Korea – don’t
even send a greeting card!
• Some countries are similar to Canada and only certain
items are controlled
Department of Treasury OFAC
• Entity concerns – Specially Designated Nationals
• This is where it gets tricky
• A transaction with a listed entity can be forbidden,
wherever they are
Penalty Example
• SDN Example
Penalty Example
• Canadian example
Don’t forget FEMA!
• Little known
• Forbids Canadian companies from refusing to do
business with Cuba if directive came from US parent
• New development related to Buy American
2 FEMA Orders
Penalty Example
• None and lets hope this goes away! Puts Canadian
subsidiaries in an impossible position
Best Practices
• Know the US rules – BIS offers great free training
sessions
• Implement controls on movement of affected items –
automation is ideal
• Automation for entity screening is a must
• Educate your Canadian employees and get executive
buy in
It’s Not Just “Exports”
• Diversion
• “Deemed Export” rules
• Sanctioned parties in country
Diversion
• What is your customer doing with your goods?
• More of a US concern (for now…)
• Good idea to follow US “Red flags” advice
Diversion
• Could Canada be adopting similar rules?
• Two recent quotes from news coverage of Streit story:
“A parliamentary committee is preparing to take a hard look at the
export controls Canada places on foreign sales of military goods and
whether sanctions and embargoes meant to stop arms shipments by
Canadians have sufficient teeth”
“the armoured vehicles were manufactured and shipped by the
company's branch in the United Arab Emirates, and therefore the sale
is outside of the federal government's arms export regulatory regime”
Deemed Export Rules
• Delivery of technology and information related to
controlled products
• Canada and US both control technology transfers
Sanctioned Parties in country
• Common misconception that “sanctioned parties” are all
foreign:
Sanctioned Parties in country
Best Practices
• Implement a “red flags” education program
• Verify if any of your technology is controlled
• Screen ALL business partners, not just your exports
(don’t rely on “my freight forwarder checks that”)
• Automate…
Automation
• Compliance with some of the above requires automation
• SPL in particular cannot be handled manually
• Licenses and permits can be managed manually, but
risky
• Many options: from low cost, on demand, to high cost
local installation
• Can also act as catalyst for internal
review/improvements
Best Practices
• Find the system option that fits your business (not the
other way around)
• Review all the options
• Don’t let it be an “IT project” – it’s a “compliance project!”
• Use the project as chance to close any existing business
gaps
Conclusion
• Some common themes:
– Automate!
– Know the rules!
– Educate your employees!
– Document your processes!
– Get executive buy in!
Links to referenced articles
• Slide # 12 http://www.cbc.ca/news/canada/montreal/iran-illegal-exporting-canada-railway-train-equipment-1.3268414
• Slide # 17a http://www.theglobeandmail.com/report-on-business/international-business/african-and-mideast-business/rcmp-
charges-alberta-company-over-illegal-shipment-to-iran/article17959104/
• Slide # 17b http://www.blg.com/en/newsandpublications/publication_3745
• Slide # 18 http://www.cbc.ca/news/politics/streit-un-arms-report-sudan-1.3758670
• Slide # 21 http://www.surreyleader.com/news/200097481.html
• (All other images from public government web sites)
Q&A Feel free to contact me:
https://ca.linkedin.com/in/kevinriddellcclp
https://twitter.com/kngriddell
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