Co-Authored by Sharath Patil
What’s Export Compliance?
Boundless opportunities exist for U.S. businesses when they export their products and services to foreign markets. In fact, over 95% of the world’s consumers are located outside of the United States. However, the vast export opportunities must be tempered by your duty to diligently and effectively comply with U.S. export control laws under the U.S. Department of Commerce’s Export Administration Regulations (“EAR”) and the U.S. State Department’s International Traffic in Arms Regulations (“ITAR”).
The EAR is a set of regulations which governs whether U.S. persons may export or transfer goods, software, and technology outside of the United States or to non-U.S. citizens. The ITAR, on the other hand, is a set of regulations which governs whether defense or military-related technologies may be exported or transferred to non-U.S. citizens. The purpose of both the EAR and the ITAR is to safeguard U.S. national security interests by ensuring that critical technology does not fall into the wrong hands. The EAR is administered by the Commerce Department’s Bureau of Industry & Security (“BIS”) while the ITAR is administered by the State Department’s Directorate of Defense Trade Controls (“DDTC”).
The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) administers and enforces economic and trade sanctions based on US foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. U.S. persons are generally prohibited from engaging in transactions, directly or indirectly, with individuals or entities (“persons”) on OFAC’s Specially Designated Nationals and Blocked Persons List, other blocked persons, and those covered by comprehensive country or region embargoes (e.g., Cuba, the Crimea region of Ukraine, Iran, North Korea, and Syria).
The Foreign Corrupt Practices Act (“FCPA”) was enacted for the purpose of making it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business. The anti-bribery provisions of the FCPA have applied to all U.S. persons and certain foreign issuers of securities. The anti-bribery provisions of the FCPA also apply to foreign firms and persons who cause, directly or through agents, an act in furtherance of such a corrupt payment to take place within the territory of the United States.
U.S. exporters should work hard to establish and maintain an effective export compliance program. According to BIS, developing an effective export compliance program is “an invaluable way a company can contribute to U.S. national security and nonproliferation priorities while protecting vital company interests.” While having an export compliance program is not a guarantee that an export violation will not occur, a coherent export compliance program can minimize the risk of non-compliance.
Why is Export Compliance Training Important?
A foundation of a strong export compliance program is export compliance training. Training is importance because it:
- Ensures that all employees understand the export regulations and reinforces internal policies and procedures. Many businesses don’t realize the export control concerns many of their employees, not just the export department. This is because the scope of the term “export” is broad in the EAR and the ITAR. For example, “deemed exports” refer to the release of controlled technology to a foreign person, including within the territory of the United States. Therefore, employees that have little to do with a business’ export activities (e.g. accountants, information technology, customer service) can inadvertently cause your business to violate U.S. export control laws (e.g. by sharing information to non-U.S. persons, by failing to secure data on a cloud server, etc.).
- Demonstrates to federal government agencies that your business is proactive about export compliance. Training is a great way to demonstrate to BIS and DDTC that you are on top of your export compliance obligations. The federal agencies like to see regular export compliance training
- Avoids your business from being subject to costly penalties and even criminal liability. Many U.S. businesses have paid hefty civil penalties for violating U.S. export control laws. L3Harris Technologies, for example, was fined $13 million for illicitly exporting defense technology and software. For more examples of costly civil and criminal penalties, check out BIS’ latest Don’t Let This Happen to You!
Training that Meets Your Organization’s Needs
Fortunately, export compliance training can be highly tailored to meet your company’s needs. Given that many different departments from sales to accounting to human resources can be implicated in export compliance matters (not just the trade department), it’s important that everyone who could violate U.S. export control laws receive a basic level of export compliance training. However, it’s also important that those individuals most involved in export matters receive in-depth training as they are most liable to violate U.S. export control laws. Below, we describe some of the trainings that Diaz Trade Law provides:
- General Awareness Training (Exporting 101): We offer an overview training for your entire organization which introduces all departments in your company to the fundamentals of export compliance. General Awareness Training ensures that your entire organization is on the same page about the importance of export compliance, and understands that export compliance involves more than just the work done by export personnel. General Awareness Training also helps ensure that everyone knows that export violations can occur in every department, and builds consciousness about avoiding export violations altogether, or identifying export violations when they do occur and proactively resolving issues in a transparent and accountable manner.
- Orientation Training: Our orientation training works with your developed export control program to assist new employees in understanding the intricacies of their new role and how it is implicated by export control laws. The orientation training is highly tailored to the new employee and your company processes. The training instills in new employees an understanding of how export violations can occur in their role, establishes good practices to avoid costly export violations, and establishes a system for proactively following-up with identified violations.
- Advanced Training for Export Personnel (Exporting 201): Diaz Trade Law offers more specialized training for export personnel in your organization who are already familiar with the fundamentals of export controls. The focused training provides in-depth training on particular issues of export controls that pertain to your organization; updates your export personnel about the latest developments in U.S. export control laws and policies; provides an opportunity to meaningfully discuss patterns of violations to ensure that these violations occur less often; and instills in the personnel an appreciation of the seriousness of U.S. export controls and the significant civil and criminal penalties associated in violating these laws.
All of your training events include assessments for comprehension, certificates for successful participation, and ample opportunities for Q&A. For your next export compliance training event, trust Diaz Trade Law to provide highly-effective, engaging training. Diaz Trade Law is also fully equipped during the COVID-19 pandemic to provide engaging online training. If you have questions or are interested in scheduling a training, reach out to us at firstname.lastname@example.org or call us at 305-456-3830.