BSAD 424 - Exam 3

Shipping controlled items out of the US.

Export

Export Controls on Commercial and Dual-Use Goods and Technologies.

Export Administration Act of 1917 and Export Administration Regulations (EAR).

What answers the question: Should a nation be able to extend the power of its export control laws (jurisdiction) over its goods and technology once they have left its territory?

Extraterritorial Jurisdiction of Export Control Laws

Models of Economic Integration:

Federal model, Free trade area, Customs union, and Common market.

An organized refusal of one or more nations to trade with a certain nation or nations, backed by economic sanctions is called:

A boycott.

Today, the ________________________ focuses on cyber-security, intrusion software, and listening technology.

Wassenaar Arrangement

Information required for the development or operation of items.

Technology

Under the US law, there are three broad policy reasons for controlling and licensing certain exports:

1. To protect national security, 2. To promote US foreign policy, and 3. To prevent the short supply of essential domestic materials.

Changes in Export Environment Since 2001:

Terrorism, Nuclear proliferation, Rise of China's power, and Russian geopolitical aggression.

GATT Art. 24 states:

"The provisions of the Agreement shall not prevent... the formation of a customs union or free trade area".

Illegal shipment of goods from one country to another.

Diversion

The North American Free Trade Agreement

is not a customs union or common market, like the EU.

A law that prevents citizens or companies from participating in a boycott.

Antiboycott

Law that protects the country's economy from excessive foreign demand for scarce materials.

Short Supply Controls

Commercial items that are used for proliferation and terrorism.

Dual-Use Items.

A regulation that restricts or prohibits relationships with "targeted" foreign countries, entities, or named individuals.

Financial Sanction

Withdrawal of trades from a country.

Boycott

The _____________ establishes the list of controlled countries and the reasons for controlling each.

President

EAR is administered by the

Bureau of Industry and Standards (BIS)

NAFTA Trade and Tariff Provisions

NAFTA fosters trade and lowers/eliminates tariffs and barriers to trade like commercial travel, the environment, worker safety, and child labor.

A group of 45 nuclear supplier nations whose main purpose is to share information and set voluntary guidelines for countries controlling the export and proliferation of nuclear material, equipment, and technology.

The Nuclear Suppliers Group

What was the challenge of US Export Control Laws?

Finding a balance between national security and economic competitiveness.

The act set to restrict trade with hostile countries during times of war or during a time of emergency declared by the president.

Trading with the Enemy Act 1917

The list that shows all the licensing requirements.

Commerce Control List

Determines whether a license needs to be exported.

Commerce Country Chart

EAR applies to commercial and "dual use" items defined to be:

Commercial item that has potential for military, terrorist or "proliferation" uses.

Legal responses by governments that make it unlawful for its citizens or companies to participate in a boycott are called:

Antiboycott laws.

The online system for collecting export information (based on Electronic Export Information (EEI) filings) that covers licensed goods and goods over $2,500 in value (with exceptions).

Automated Export System

Canada and the US are each other's largest trading partners.

Canada - US Trade

Penalties for Export Violations:

Civil Violation: $250,000 fine or twice amount of the transaction. Willful Violation: $1 million fine and up to 20 years in prison.

The release or transfer of any technology or software to a foreign person in the US.

Deemed Export

In export control regulation, the unlawful transfer, transshipment, rerouting or re-exporting of controlled items or technology is called:

Diversion.

Unlawful to Release Items to End Users:

Entities, Specifically designated nationals/blocked, Unverified firms, Denied persons, and Debarred parties.

Large exporting firms typically wish to minimize legal risks of violating export control regulations and all export laws in general. A best strategy for doing this is:

Established of an export management and compliance program.

The alpha-numeric code listed in commerce control list which describes the item.

Export Control Classification Number

Laws and regulations that govern the licensing of certain goods and technology exported from the US or transferred to non-US citizens.

Export Controls

Laws and regulations restricting the sale and licensing of goods and technology exported from the US are generally referred to as:

Export Controls.

Types of Compliance and Enforcement:

Export Management and Compliance Programs Record-Keeping Requirements Investigation and Enforcement Denial of Export Privileges

Availability of controlled items in other countries.

Foreign Availability

T/F: US exporters are responsible for determining if an export license is required.

True

This statute provides the current grant of authority to the president to regulate economic and financial transactions and to place restrictions on importing or exporting during a peacetime international emergency.

International Emergency Economic Powers Act (IEEPA)

Licensing Review Process:

Issued by the Bureau of Industry and Security, which coordinates with many other agencies. Issues special comprehensive licenses. Validates shipments to preapproved end users.

The US exported $267.2B to Mexico in goods and services; and imported $316.4B from Mexico in goods and services. 48% of all imports into Mexico are from the US.

Mexico - US Trade

A voluntary association of 35 countries committed to keeping missile technology from rogue regimes and terrorist groups.

Missile Technology Control Regime

___________ are typically the most effective form of sanctions

Multilateral sanctions resulting from passage of resolution by UN Security Council.

License required from the Bureau of Industry and Security (BIS) for items that are controlled owing to national security reasons.

National Security Controls

Reasons for EAR Control:

National Security Controls, Foreign Policy Controls, Trade Controls for Reasons of Short Supply, and Trade Controls for the Protection of Wildlife, the Environment, Public Safety, or of Antiquities.

Elimination of Non-Tariff Borders:

Prohibits new export taxes on goods and Customs user fees were eliminated in 1999.

The shipment or transfer of American-controlled items or technology from one foreign country to another foreign country.

Re-Export

Regulations that prohibit US citizens or companies from doing business with certain foreign entities.

Sanctions

Voluntary agreement between 41 governments on "dual-use goods," goods used for both commercial and military applications.

The Wassenaar Arrangement

One of the main areas of scrutiny and review by the government for license applications to export controlled items or technology is for application to specify in detail in the application:

The person or entity receiving the item or "end user."

The policy reasons to support the control and licensing of certain exports include all of the following:

To prevent the short supply of essential domestic materials; To promote US foreign policy; To protect national security.

Employee Participation in Strategic Decisions:

US Approach: Plants with more than 100 employees need 60 days notice. German Approach: Grants workers a right of consultation. Japanese Approach: Distinctions between management and union is blurred. Chinese Approach: Company unions not designed to advocate for workers.

Export Administration Regulations (EAR) promulgated under original authority of Export administration Act of 1979 are administered by:

US Department of Commerce & US Department of Treasury.

Legal Framework Reflecting Impediments:

US: "At Will" employment is very flexible, you can be fired at any time with only some expectations (contracts, plant closing law). Europe: Just cause termination with employee representation on boards. Japan: Enforce cultural conditions.

Impediments to Dismissal:

US: No one is entitled to a job. Europe: Over time, workers acquire property interest in their jobs. Japan: Job defines the person and place in society.

Extraterritorial Application of US Employment Discrimination Law

VII and 1991 Civil Rights Act applies to firms outside the US that are "Under control" of a US firms.

The purpose of a customs union or of a free trade area should be to

facilitate trade between territories and not to raise barriers to the trade of other WTO trade countries.

NAFTA has similar provisions to GATT:

once goods arrive from another NAFTA country, they are treated without discrimination and no differently than domestic goods (National Treatment Rule)

The North American Free Trade Area is comprised of

the United States, Canada, and Mexico. It is the largest free trade area in the world -- GDP $15 trillion.