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DeAnna Luna President DeLuna Group LLC Tel: 619-334-9436 E: PowerPoint Presentation
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DeAnna Luna President DeLuna Group LLC Tel: 619-334-9436 E:

DeAnna Luna President DeLuna Group LLC Tel: 619-334-9436 E:

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DeAnna Luna President DeLuna Group LLC Tel: 619-334-9436 E:

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  1. DeAnna Luna President DeLuna Group LLC Tel: 619-334-9436 E:

  2. Overview of US Export Regulations

  3. Exporting Product Outside US Customs Zone Exporting Certain Technical Data Outside US Customs Zone Disclosing Certain Technical Data In US To Certain Non-US Nationals (Foreign Nationals) US Nationals = Citizens + Permanent Residents of Any Ethnic Origin WHAT ARE EXPORTS?

  4. Subject to EAR/ITAR: ALL US Exports Subject to EAR but Only Defense Articles Subject to ITAR “Dual-Use”:Commercial Product With Significant Military Applicability “Defense Article”:Everything From Major Weapons Systems to Specially Designed Parts/Components for Defense Systems, Including Commercial Satellites AND Potentially Commercial Products BUT Predominant Use of Military Major Military Equipment:Complete Systems/ Services Over $14,000,000/$50,000,000; Congressional Notification TERMS

  5. Foreign National (FN) Unclassified: Non-US Citizen or Permanent Resident Alien (Exemption for Certain Canadian Nationals) Foreign National (FN) Classified: Non-US Citizen Only IML/USML: International Munitions List; US Munitions List Technical Data: Proprietary/Classified Technical Data (TD) Pertaining to USML Items in Tangible and Intangible (Discussions Form) Registration: ALL Parties (Manufacturing, Sales, Brokers, etc.) Must Formally Register With DDTC “Controlled”: Specifically Listed Product AND Related TD TERMS-2

  6. Significant Military Equipment (SME) : Complete Weapon Systems, Etc., Identified in ITAR Delegation of Authority (DoA): DDTC Decides on Behalf of DoD Commodity Jurisdiction: Formal Application to DoC/DoS to Determine Jurisdiction Technology Assistance Agreement (TAA): Formal DDTC Approval for Technology Transfer Compliance Program: Similar to DoC, BUT Focused on FN’s Special Security Arrangement (SSA): DeFacto Compliance; Allows for Classified Work at Foreign-Owned US Companies TERMS-3


  8. Disclosure To Any Foreign National Of “Controlled Technology” Any Way, Anytime, Any Media “Controlled Technology” Technology Related To “Defense Article” Plus Other Specifically Identified Technologies Unique Aspects For Military Use Satellites Terms of Reference

  9. ANYWHERE U.S. Sites Foreign Sites Airplanes Home, Etc. ANY FOREIGN NATIONALS Non-U.S. Citizens And Non-Resident Alien (Green Card) Includes: Company Employees Family Friends Visitors, Etc. Technology Exports

  10. ANY WAY -Blueprints -Documents (Hard & Soft) -Presentations -Casual Discussions -E-mail/FTP, Etc. ­T angible and Intangible Technology export types


  12. Denial of export privileges and blacklisted Revocation or suspension of licenses Criminal sanctions: IEEPA Ten years in prison $50,000 fine individuals and corporations General Criminal code: Twice the gain or loss $500,000 for corporations $250,000 for individuals Iran Sanctions Act: One million dollars for corporations and individuals 12 years in prison United Nations Participation Act: Forfeiture of funds or other property Sanctions and Authorities for Various US Export Controls

  13. IEEPA $11,000 per violation Trading with the Enemy Act $55,000 per violation Iran Sanctions Act $275,000 per violation Foreign Narcotics Kingpin Designation Act and Antiterrorism and Effective Death Penalty Act $1,000,000 per violation Sanctions (Other Civil Penalties)

  14. Criminal For Both EAR/ITAR Administrative Fines - $50,000 + Per Violation Even Major Companies Have Problems IBM - Loral Space Boeing - Lockheed-Martin Thales Enforcement By FBI, US Customs, DoC And DoS PENALTIES

  15. Civil Penalties: The Civil Penalty For Each Violation Involving Controls Imposed On The Export Of Defense Articles May Not Exceed $500,000. The Civil Penalty For Each Violation Of The Prohibition On Incentive Payments Shall Not Exceed $500,000 Or Five Times The Amount Of The Prohibited Payment, Whichever Is Greater. Criminal Penalties: A Fine Of Not More Than $1,000,000 Or Imprisonment Not More Than 10 Years Or Both For Each Violation. Other Sanctions: Seizure And Forfeiture Of Arms, Munitions Or Other Articles Which Are Attempted To Be Exported In Violation Of The ITAR. INTERNATIONAL TRAFFIC IN ARMS REGULATIONS


  17. US Department of Commerce: Export Administration Regulations (EAR) Coverage:All With Emphasis On “Dual-Use” And “Foreign Policy” Controls US Department of State: International Traffic In Arms Regulations(ITAR) Coverage: “Defense Article” and Certain Commercial (Commercial Satellites) US Department of Treasury: Office of Foreign Assets Control (OFAC) Coverage: Embargoed Countries (Cuba, Iraq, Iran, etc.) Transactions GOVERNING REGULATIONS

  18. Office of Defense Trade Controls (ODTC) & International Traffic in Arms Regulations (ITAR) US Munitions List (USML) USML is unique to the US Prevails in the event of conflict with the Commerce Control List ODTC determines its jurisdiction under the ITAR and USML Bureau of Industry and Security (BIS) and Export Administration Regulations (EAR) Multilateral regime lists largely in Commerce Control List (CCL) Single dual-use list approach Follows the European Union single dual-use list One proper classification Office of Foreign Assets Control (OFAC) & many different sets of regulations implementing embargoes, counter-terrorism rules, and narcotic trafficker rules Split jurisdiction is a practice generally not followed by most other countries Split Jurisdiction in US Government

  19. Territorial jurisdiction to waters edge (or to edge of sovereignty over waters and the seabed) Sovereignty over citizens (natural persons and corporate bodies) Reexport controls—the flag following the item around the world (commodity, software, technology) US exercises each type of sovereignty US allies express opposition to extraterritorial reach In practical terms, reexport restraints by license condition and other means are important to constrain circumvent of the goals of export control programs (to deny access to target countries or persons) Methods to Exercise Jurisdictionor Control

  20. EAR

  21. International Economic Emergency Powers Act (IEEPA) Export Administration Act has expired and Congress has renewal legislation under consideration; however, that legislation has not passed yet to date Statutory Authority for EAR

  22. National Security Non-proliferation of weapons of mass destruction and the means to deliver them Counter-terrorism Other Foreign Policy goals of the United States Government best practices: state purposes for the controls Purpose of the EAR

  23. Principal dual-use regulations The four basic parts of the EAR MUST be considered only in order and never out of order That order is scope, general prohibitions, license exceptions, and license applications If you deviate from this order, you will not reach the right answer to the question, “Do I need a license?” Departments of Defense, State, Energy, and Intelligence community can be involved in licensing decisions Key Points Regarding the EAR

  24. Export Regulations For Commercial/Dual-Use National Security − Anti-terrorist Foreign Policy − Other National Security: 4 Regimes Plus Unilateral Missile Technology − Wassenaar Arrangement Control Regime − Nuclear Suppliers Group Australia Group Administered By Commerce Reviewed By Defense, State, Intel, Energy Very Few Licenses Necessary To Friends and Allies Still Requires Internal Corporate Paperwork WHAT IS EAR?


  26. Scope General Prohibitions License Exceptions Licenses High-Level Structure of EAR

  27. Items in the U.S Items of US-origin (vs foreign items remaining unchanged) Foreign-made computers Foreign produced direct product of US tech data or software Territory of free trade zones or other areas of land in the United States where items have not entered the customs territory of the US Scope Part 734

  28. Export or reexport in any form (tangible or intangible) Export or reexport via any means (release abroad, e-mail, FAX, conversations, phone conversations, and physical exports regardless of whether technology or software goes through the customs house or requires an export declaration) Transfers in Cyberspace Deemed Export rule (release to a non-US person or permanent resident)(more in another session) Server access is the most important issue in the modern corporate environment Technology and Software


  30. EAR99 items include, for example, basket balls, refrigerators, hammers, and paper clips are generally not subject except for WMD A foreign made item is not subject to the EAR unless it incorporates more than de minimis content or is the FPDP of defined technology or software (General Prohibitions 2 and 3 define scope as well as the nature of the prohibitions) US imposes many list-based unilateral controls—this accounts for about 60% of the CCL General Prohibitions Principles

  31. You may not export or reexport An item designated on the Commerce Control List (CCL) To a designated country See the Country Chart at Part 738 First of three list-based prohibitions General Prohibition One – Export & Reexport List Based

  32. You may not reexport/export from abroad An item designated on the CCL To a designated country See the Country Chart at Part 738 25/10% de minimis rule (exceptions) Defines scope for foreign made items with US commodities incorporated General Prohibition Two

  33. You may not reexport/export from abroad A foreign-made item designated on the CCL Incorporating US parts, components, or materials To a designated country See the Country Chart at Part 738 25/10% de minimis rule (exceptions) Defines scope for foreign made items with US commodities incorporated General Prohibition Two – P&C

  34. You may not reexport/export from abroad A foreign-made item on the CCL That is the direct product of US Tech Data That itself requires a written assurance vs reexport to the former Soviet, China, & embargoed destinations And that is controlled only for NS reason Also extends to direct product of a plant & major component of a plant General Prohibition Three

  35. You may not deal with a denied party Applies to all items “subject to the EAR” and is not limited to the CCL Prohibits domestic transfer abroad to denied parties Prohibits domestic transfers in the US with knowledge denied party will benefit from its export Do you have to screen? Yes to avoid liability in the event of a sale to a restricted party.. Do you have to screen domestic transactions? Yes to avoid liability in the event of a sale to a restricted party. Beyond the EAR, you may not deal with a blacklisted party in any way under the various OFAC rules (totals about 11,000 records in more than two dozen lists) General Prohibition Four – Denied Parties

  36. You may not export or reexport An item “subject to the EAR” To a prohibited end-use or end-user (EPCI) Nuclear, chemical & biological, missile Marine nuclear Prohibits dealing with Entities List of firms of proliferation concern and Unverified List of firms that have not permitted verification visits by US Government personnel Do you have to affirmatively inquire? License Exception end use limits distinguished General Prohibition Five – End Use

  37. You may not export or reexport An item “subject to the EAR” To an embargoed destination Note the relationship of the EAR and OFAC rules Each set of OFAC regulations addresses a single boycott, terrorism, or narcotics trafficking General Prohibition Six--Embargoes

  38. A US person may not engage in Activity that supports proliferation (financing, contracting, freight-forwarding, employment, etc.)(744.6) Does not apply to foreign subs—does apply to branches US citizens are restricted for proliferation activities even though they use no US-origin commodities, software, or technology An exercise of the citizenship theory of sovereignty This is broader than a restriction on brokering and trafficking related to proliferation General Prohibition Seven – US Person Activity Rule

  39. You may not transit or unladen Items subject to the EAR In certain countries – North Korea, Cuba Relic of Cold War May suggest duty to take care in avoiding shipping routes that present the risk of diversion General Prohibition Eight – Transit Prohibition

  40. You may not violate any: Orders Terms Conditions General Prohibition Nine – Orders & Conditions

  41. You may not transfer, store, finance, transport or do virtually anything else With knowledge a violation has occurred or is about to occur In connection with the item If it is subject to the EAR See Know Your Customer Guidance Goal is to prevent circumvention Makes clear that more than one party may be liable for a violation General Prohibition Ten – Knowledge Violation About to Occur

  42. If a general prohibition applies, go on to consider each license exception NEVER consider license exceptions until you have completed the analysis of general prohibitions If no general prohibition applies, ship NLR, file the export declaration, and maintain the necessary records


  44. 0-Nuclear Materials, Facilities and Equip 1-Materials, Chemicals, etc. 2-Materials Processing 3-Electronics 4-Computers 5-Telecommunications Part 1 5-Information Security Part 2 CCL Structure – Ten Categories

  45. 6-Lasers and Sensors 7-Navigation and Avionics 8-Marine 9-Propulsion Systems CCL Structure – Ten Categories

  46. Specific ECCN Has Differing Licensing/Regulatory Requirements ECCN Determination Is Critical For Compliance ECCN NUMBERS

  47. A-Equipment, Assemblies, Components (Ex. computers at 4A003) B-Test, Inspection and Production Equipment (Ex. semiconductor manufacturing equipment at 3B001) C-Materials (Ex. precursor chemicals at 1C350) D-Software (Ex. encryption software at 5D002) E-Technology (Ex. technology for controlled gas turbine engines at 9E001) CCL Structure -Five Groups in Each Category

  48. B. The equipment to make and test “the product” CCL Structure -Groups within Each Category A. “The product” A, B & C = commodities only C. The materials to make “the product” D. The software to develop, produce or use “the product” D = software only E. The technology to develop, produce or use “the product” E = information and technical assistance only (technology)

  49. Each ECCN is composed of 5 characters which identify the category, group, control regime and numerical sequence within the specified CCL Category. The first character is a number denoting one of the CCL categories. The second character is a letter denoting one of the groups within a specific category. The last three characters loosely reflect the control regime(s): 001 - 099 Wassenaar Arrangement 101 - 199 Missile Technology Control Regime 201 - 299 Nuclear Suppliers Group 301 - 399 Australia Group (Chemical & Biological weapons controls) 901 - 999 Unilateral US Controls CCL Structure – ECCN Format Overview

  50. “Items subject to the EAR that are not elsewhere specified in this CCL Category or in any other category in the CCL are designated by the number EAR99.” Non-listed items EAR99 Items EAR99 - A “Bucket” Classification Entry at the end of Each CCL Category CCL