Export Controls - Problem 8.1

Fitzgerald, Blacklisting and Secondary Boycotts c. 667

U.S. blacklisting to enforce its export policies has a substantial impact on and serves as a deterrent to engage with blacklisted countries to foreign companies. In the other hand, history shows when the US has overextended its reach and been retaliated against by international organizations that refuse to honor its sanctions and blacklisting.

Bowman, Emails, Servers, and Software c. 661

Export controls need to adapt to modern circumstances to achieve goal of decreased regulatory burden and increased domestic security.

Items subject to the EAR (§ 734.3)

1) All items in the United States, including in a U.S. Foreign Trade Zone or moving in transit through the United STates, from one foreign country to another. 2) All U.S. origin items wherever located. 3) Foreign made commodities that incorporate controlled U.S. origin commodities, foreign made commodities that are "bundled" with controlled U.S. origin software, foreign made software that is commingled with controlled U.S. origin software, and foreign made technology that is commingled with controlled U.S. origin technology: i) in any quantity per § 734.4(a) or ii)in quantities exceeding de mini is levels per § 734.4(c) or (d). 4) Certain foreign-made direct products of U.S. origin technology or software... per § 736.2(b)(3). 5) Certain commodities produced by any plant or major component of a plant located outside the United STates that is a direct product of U.S.-origin technology or software... per § 736.2(b)(3).

Items subject to EAR

(1) All items in the United States, including in a U.S. Foreign Trade Zone or moving in transit through the United States from one foreign country to another; (2) All U.S. origin items wherever located; (3) Foreign made commodities that incorporate controlled U.S. origin commodities, foreign made commodities that are "bundled" with controlled U.S.-origin software, foreign made software that is commingled with controlled U.S. origin software, and foreign made technology that is commingled with controlled U.S. origin technology... (4) Certain foreign-made direct products of U.S. origin technology or software... (5) Certain commodities produced by any plant or major component of a plant located outside the United States that is a direct product of U.S.-origin technology or software.

Facts to determine EAR obligations

(1) What is it? Look to classification. (2) Where is it going? Look to EAR §§ 738 & 774. (3) Who will receive it? Look to SDN or other blacklists. (4) What will they do with it? Proliferation... (5) What else do they do? Proliferation... EAR § 732.1(b)

Export - EAA

(A) an actual shipment, transfer, or transmission of goods or technology out of the United States; (B) a transfer of goods or technology in the United States to an embassy or affiliate of a controlled country; or (C) a transfer to any person of goods or technology either within the United States or outside of the United States with the knowledge or intent that the goods or technology will be shipped, transferred, or transmitted to an unauthorized recipient.

Export (definition under EAA/EAR)

(A) an actual shipment, transfer, or transmission of goods, or technology out of the United States; (B) a transfer of goods or technology in the United States to an embassy or affiliate of a controlled country; or (C) a transfer to any person of goods or technology either within the United States or outside of the United States with the knowledge or intent that the goods or technology will be shipped, transferred, or transmitted to an unauthorized recipient. 50 App. USC § 2415(5)

10% De Minimis Rule

(C) 10% de mini is rule... the following re-exports are not subject to the EAR when made to any country in the world... 1) re-exports of a foreign made commodity incorporating controlled U.S. origin commodities or "bundled" with U.S. origin software valued at 10% or less of the total value of the foreign made commodity... 2) re-exports of foreign made software incorporating controlled U.S. origin software valued at 10% or less of the total value of the foreign made software; or 3) re-exports of foreign technology commingled with controlled U.S. origin technology valued at 10% or less of the total value of the foreign technology...

25% De Minimis Rule

(D) 25% De Minimis Rule... the following re-exports are not subject to the EAR when made to countries other than those listed in Country Group E:1 of Supplement No. 1 to part 740 of the EAR... 1) re-exports of a foreign made commodity incorporating controlled U.S. origin commodities or "bundled" with U.S. origin software valued at 25% or less of the total value of the foreign made commodity... 2) re-exports of foreign made software incorporating controlled U.S. origin software valued at 25% or less of the total value of the foreign made software; or 3) re-exports of foreign technology commingled with controlled U.S. origin technology valued at 25% or less of the total value of the foreign technology.

Items not subject to EAR (§ 734.3)

1) Items that are exclusively controlled for export or re-export by the following departments and agencies of the U.S. government which regulate exports or re-exports for national security or foreign policy purposes: i) Department of State... per International Traffic in Arms Regulations... ii) Treasury Department, Office of Foreign ASsets Control. 3) Publicly available technology and software, except software controlled for EI reasons under ECCN 5D002 on the Commerce Control List and mass market encryption software with symmetric key length exceeding 64-bits controlled under ECCN 5D992. (4) Foreign made items tat have less than the de mini is percentage of controlled U>S. Content based on the principles described in § 734.4 of this part.

Export Control Classification Number (ECCN)

Alphanumeric code assigned to articles, technology and software (collectively, "items") by the Department of Commerce, Bureau of Industry and Security (BIS).

Good - EAA

Any article, natural or man made substance, material, supply or manufactured product, including inspection and test equipment and excluding technical data.

What is an export?

Any item sent from the United States to a foreign destination, including commodities, software, or technology. Transportation does not determine whether something is an export. Ex., schematics sent via fax are an export.

Extraterritoriality (exports)

Assertion by U.S. of extraterritorial jurisdiction over U.S. goods and technology located outside the U.S. based solely on the fact that these items are of U.S. origin or contain significant U.S. content. Since a U.S. court does not actually have personal jurisdiction over a foreign person, the export regime uses the threat of blacklisting to enforce itself extraterritorially. If on U.S. blacklist, substantial opportunity loss.

Commerce Control List (CCL)

Categorizes products: 1) nuclear materials, facilities and equipment, and miscellaneous; 2) materials, chemicals, microorganisms, and toxins; 3) materials processing; 4) electronics; 5) computers; 6) telecommunications and information security; 7) lasers and sensors; 8) navigation and avionics; 9) marine; and 10) propulsion systems, space vehicles, and related equipment.

EAR 99

Classification for an item indicating that it is subject to the EAR, but not listed within a specific ECCN on the CCL.

Enhanced Proliferation Control Initiative

Export control initiative that permits the U.S. to stop U.S. firms from exporting tech to proliferators.

Joyner, Enhanced Proliferation Control Initiative c. 663

EPCI provides a solution to dual-use goods control in today's post-9/11 world. However, it doesn't provide much help to exporters to know how to comply.

EAR

Export Administration Regulations

International Economic Emergency Powers Act (IEEPA)

Federal law authorizing president to regulate commerce after declaring a national emergency in response to any unusual and extraordinary threat to the United States which has a foreign source. Was used to continue the EAA during lapse and after expiration.

Do you need an export license?

First, find the Export Control Classification Number (ECCN). Second, check the Commerce Control List (CCL). Third, check the Commerce Country Chart (CCC). Fourth, check the Entity List, Treasury Department Specially Designated Nationals And Blocked Pearson's LIst, the Unverified List, and the Denied Persons list. Fifth, check what the exports will be used for (ex., even a pencil used in the proliferation of nuclear weapons is a prohibited export).

Bureau of Industry and Security (BIS)

In the U.S. Department of Commerce, the department responsible for enforcing export administration regulations on exporters.

Technology - EAA

Information and know-how (Whether tangible form, such as models, prototypes, drawings, sketches, diagrams, blueprints, or manuals, or in intangible form, such as training or technical services) that can be used to design, produce, manufacture, utilize, or reconstruct goods, including computer software and technical data, but not the goods themselves.

Dual-use

Items (goods, software, technology) that can be used for both civilian and military applications.

Specially Designated Nationals (SDN)

List maintained by OFAC of individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific.

Enhanced Proliferation Control Initiative

No U.S. person may, without a license, export, reexport, or transfer to or in any country any item where that person knows that such items: (a) will be used in design, development, production or use of nuclear explosives, (b) will be used in design, development production or use of missiles, or (c) will be used in the design, development, production, stockpiling, or use of chemical or biological weapons.

Office of Foreign Assets Control (OFAC)

Office within the U.S. Department of the Treasury that administers and enforces economic and trade sanctions against targeted foreign countries, terrorism-sponsoring organizations, terrorists, international narcotics traffickers, and others based on U.S. foreign policy and national security goals. After September 11, 2001, became a significant player in the anti-money laundering field as well. It maintains the Specially Designated Nationals list.

Export Administration Act (EAA)

Once controlled the type of goods that could be exported to certain "unfriendly" countries. During lapse and upon its expiration, was continued by President's executive authority per the IEEPA.

Export Administration Regulations (EAR)

Regulates dual-use items. Under the Department of Commerce. Replaced by Export Control Act of 2018.

International Traffic in Arms Regulations (ITAR)

Regulatory regime to restrict and control the export of defense and military related technologies to safeguard U.S. national security.

Deemed export

Release of controlled technology to foreign persons in the U.S. are "deemed" to be an export to the person's country or countries of nationality. See EAR § 734.14(b).

Re-export (definition under EAR)

Shipment or transmission of an item subject to the EAR from one foreign country to another foreign country. A release of technology or software subject to the EAR in one foreign country to a national of another foreign country. An item of U.S. origin is subject to the EAR regardless of how many times it is exported, transferred, or sold.

Direct product

The immediate product (including processes and services) produced directly by the use of technology or software. EAR § 734.3(4).

Person - EAA

The singular and the plural and any individual, partnership, corporation, or other form of association, including any government or agency thereof.

Joyner, Restructuring Multilateral Export Control Regime System c. 674

There is much debate as to whether existing export control regimes can be adapted to modern geopolitical challenges, such as WMD proliferation and global terrorism.