preparing for compliance and enforcement under export control reform
TRANSCRIPT
Preparing for Compliance and Enforcement Under Export Control Reform
Ohio Foreign Commerce Association
Cleveland, OhioSeptember 9, 2013
Law Offices of Jon P. Yormick Co. LPAAn International Law PracticeAttorney Advertising
Disclaimer
• The information provided is believed to be accurate as of the date of the presentation, but is subject to change without notice
• This presentation is designed for informational purposes only and is not intended to be, nor should it be deemed, specific legal advice. If such advice is required, please consult with qualified legal counsel
Commerce Control ListCategories
0 – Nuclear Materials, Facilities and Equipment and Misc.
1 – Materials, Chemical, Microoganisms, and Toxins
2 – Materials Processing
3 – Electronics
4 – Computers
5 – Telecommunications and Information Security
6 – Sensors and Lasers
7 – Navigation and Avionics
8 – Marine
9 – Propulsion Systems, Space Vehicles and Related Equipment
US Munitions List
• Cat. I - Firearms, Close Assault Weapons and Combat Shotguns
• Cat. II – Guns and Armament
• Cat. III - Ammunition/Ordnance
• Cat. IV - Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines
• Cat. V - Explosives and Energetic Materials, Propellants, Incendiary Agents, and their Constituents
• Cat. VI - Vessels of War and Special Naval Equipment
• Cat. VII -Tanks and Military Vehicles
• Cat. VIII - Aircraft and Associated Equipment
• Cat. IX -Military Training Equipment
• Cat. X - Protective Personnel Equipment
US Munitions List (cont’d)• Cat. XI. - Military Electronics
• Cat. XII - Fire Control, Range Finder, Optical and Guidance and Control Equipment
• Cat. XIII - Auxiliary Military Equipment
• Cat. XIV - Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment
• Cat. XV - Spacecraft Systems and Associated Equipment
• Cat. XVI - Nuclear Weapons, Design and Testing Related Items
• Cat. XVII - Classified Articles, Technical Data and Defense Services Not Otherwise Enumerated
• Cat. XVIII - Directed Energy Weapons
• Cat. XIX - [Reserved]
• Cat. XX - Submersible Vessels, Oceanographic and Associated Equipment
BIS FY 2012 Annual Report to Congress
• Under Secretary Hirshhorn: “Enforcement is an essential aspect of the BIS mission.”
• Asst. Sec. for Export Administration Wolf: “The greatest number of license application approvals under a single commodity classification was for chemical manufacturing facilities and equipment (ECCN 2B350)…”
• “…BIS conducted 26 deemed export license on-site compliance reviews to confirm implementation of technology control plans and other conditions associated with those licenses.”
BIS FY 2012 Annual Report to Congress
• Asst. Sec. for Export Enforcement Mills: “…BIS investigations resulted in the completion of 42 administrative export and antiboycott cases against individuals and businesses and $7,442,600 in civil penalties…”
• 10 antiboycott violation cases, totaled $142,600
• 32 administrative settlements = $228,000+ average
ECR: Where are we now?
• October 15 – Cats. VIII and XIX • 600 Series – defense articles on CCL• Cat. VIII > ECCN 9A6xx• Get in the queue?
TRANSITION ≠ DE-CONTROL
ECR: Where are we now?
• “Specially Designed” – “catch and release”
• (a) – which commodities and software
• (b) – which parts, components, accessories, attachments, and software are excluded
“Specially Designed” Light• (a) Except for items described in (b), an “item” is
“specially designed” if it:
– As a result of “development” has properties peculiarly responsible for achieving or exceeding the performance levels, characteristics, or functions in the relevant ECCN or U.S. Munitions List (USML) paragraph; or
– Is a “part,” “component,” “accessory,” “attachment,” or “software” for use in or with a commodity or defense article ‘enumerated’ or otherwise described on the CCL or the USML.
“Specially Designed” Extra Light
• (b) A “part,” etc. … is not “specially designed” if it:
• Is a fastener (e.g., screw, bolt, nut, nut plate, stud, insert, clip, rivet, pin), washer, spacer, insulator, grommet, bushing, spring, wire, solder;
• Has the same function, performance capabilities, and the same or ‘equivalent’ form and fit, as a commodity or software used in or with an item that:
• Is or was in “production” (i.e., not in “development”); and not on CCL or USML or controlled for AT only;
• Was or is being developed as a general purpose commodity or software (no specific knowledge) or
• Was or is being developed with “knowledge” that it would be for use in or with commodities or software… exclusively for use in or with EAR99 commodities or software.
BIS Decision Tools
Specially Designedhttp://www.bis.doc.gov/index.php/specially-designed-tool
Commerce Control List (CCL) Order of Review
http://www.bis.doc.gov/index.php/export-control-classification-interactive-tool
Aeroflex, Inc. Consent Agreement
• 158 violations
• “…systemic and longstanding nature of the violations based on improper product classifications…”
• $8M – 50% on remedial measures
Thank you
Jon P. YormickAttorney and Counsellor at Law
Law Offices of Jon P. Yormick Co. LPA
Toll Free: +1.866.967.6425
Mobile: +1.216.269.5138
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