Does Your Export Compliance Program Pass Muster?

Small companies may suddenly find their export compliance programs aren’t up to the expectations of the Departments of State, Directorate of Defense Trade Controls (DDTC) or Commerce, Bureau of Industry and Security (BIS). This is particularly true when you consider the complexity of the Export Control Reform (ECR) initiative, and the significant changes to the US Munitions List (USML) that have occurred or will occur as a result of ECR. Items once controlled under the International Traffic in Arms Regulations (ITAR), may now be controlled under the Export Administration Regulations (EAR), under the so-called “600 Series” ECCNs (Export Control Classification Number), with a totally different set of rules to comply with. Added to that, technical services or assistance related to these now EAR controlled articles may remain controlled under the ITAR, and unknowing or unprepared companies may find their export compliance program woefully deficient.

One of the most common issues small companies face is that the company budget doesn’t provide for dedicated internal export compliance resources and personnel assigned to export compliance may be multi-hatted, and don’t have the time or the right level of training to develop a comprehensive company-wide export compliance program. Often companies only learn that their compliance program is lacking during a US government investigation of matters related to a voluntary disclosure as a result of a violation of the ITAR or the EAR. Below are some examples of things that may require a company to submit a voluntary disclosure:

  • The company learns the parts it has been exporting without a license for 10 years are regulated by the ITAR and would have required an ITAR license to ship. The company needs to complete the export of the remainder of the hardware on the purchase order and needs an ITAR authorization to do so;
  • The company has a foreign national employee assigned to perform a manufacturing or engineering related task on an ITAR or EAR 600 series hardware and the company does not have the required authorization from State or Commerce:
  • The company learns that its domestic supplier of ITAR or 600 series hardware has had the part produced offshore in China or another destination without a ITAR/EAR authorization;
  • The company learns that the foreign program it has been providing design assistance on involves a platform on the USML or Commerce Control List (CCL) in a 600 series ECCN;
  • The company is using the cloud for its IT storage and email requirements and learns that its service provider is hosting the data on servers located offshore;
  • The company learns that its foreign partners on an ITAR TAA (Technical Assistance Agreement) are transferring technical data received from your company to subcontractors that are not listed on the TAA;
  • The company failed to renew its State Department ITAR registration in a timely manner but continued to make technical data and defense service exports against existing State Department licenses;
  • The company is notified that it is a named party in another companies voluntary disclosure

If you are looking for an ITAR consultants, you might want to consider FD Associates Inc, as they have more than 100 years of combined experience and can definitely help you with ITAR and EAR.