As Export Control Reform (ECR) picks up speed and additional categories transition over, Export Control Reform will simply become Export Control and, not quite so simply, the “new normal”.
I say “not so simply” because there are many pitfalls you need to navigate so your company stays compliant and does not become the unfortunate target of an Office of Export Enforcement (OEE) audit.
The U.S. Government recently announced the re-enactment of its customer visit program and the creation of an inter-agency triage unit for enhanced enforcement. This will have a specific focus on end-use checks on agreements regarding the potential risk of export diversion.
They have also indicated an anticipated increase in:
- The number of license applications Returned Without Action (RWA)
- Voluntary Self Disclosures (VSD) of possible EAR violations
WHO ARE THEY TARGETING?
- Newly Registered Companies
- Companies with a high level of license application rejections (RWAs)
- Companies that deal with items on the Department of Defense (DOD) “Top 10 Critical Devices” list
WHAT CAN YOU DO TO MITIGATE THE RISKS?
Focus on the basic elements of every license request: country, commodity, end-user and end-use. Be sure to tell the Defense Technology Security Administration (DTSA) exactly what you are doing and more importantly, what you are not doing, avoiding jargon like program names or acronyms. Exercise caution when determining jurisdiction, and watch for potential double licensing requirements to which you must adhere. Take care with sub-category enumeration, keeping in mind that the new enumeration system requires steadfast specificity to navigate:
A. 9 Cat VIII “buckets” (‘a’ through ‘I’) became 44 Cat VIII “buckets”
B. Cat XIX created 14 “buckets” from Cats IV(d), VI(f), VII(f), VII(b)
It’s vital that you communicate all updated classifications, jurisdictions, exemptions and exceptions to your subsidiaries, suppliers and customers both in the U.S. and internationally, ensuring they’re flowed through to Traffic, Shipping and Freight Forwarders. These updates must also appear on all of your export documents.
Finally, don’t wait until the last minute to come up with your ECR strategy, and then reactively rush and make potential mistakes. You need the time to:
a) determine your export compliance needs: past, present and future
b) prioritize your business needs and opportunities
c) engage and educate employees throughout your organization of the fundamental changes, impact and new processes associated with ECR
d) communicate these changes to your business partners
e) execute the reclassification and license application process
You can become Export Control Reform-savvy. Use all available informational resources, attend trainings, and talk to other compliance professionals so that you’re poised for ECR success.