Export Control Reform

Happy Birthday, Export Control Reform! Top 4 ECR Growing Pains

While nibbling on the remnants of leftover Halloween candy and looking ahead to Thanksgiving celebrations, take a moment to try to guess the fall event you may not have remembered.

It took place on October 15th. A hint: it’s related to export compliance. Anyone? Time’s up. October 15th 2014 marked an important one-year anniversary: the first export regulations revised under Export Control Reform (ECR) went into effect.

Don’t worry, ECR isn’t sad that you forgot its birthday (it celebrated with friends at the Bureau of Industry and Security (BIS)). You’re probably shaking your head and thinking, where did the time go? Indeed, time flies when you’re busy, and it’s certainly been a busy twelve months for organizations across the country as they’ve managed the changes that ECR brought to their daily processes, resource management and budgets. Certainly there have been some growing pains during ECR’s infancy (and no doubt some sleepless nights and worry). Adjusting to life with the new little guy hasn’t always been easy.

Here are the top 4 things overheard in corporations around the U.S. this first year in the life of ECR:

1. “We’re ready! At least, we thought we were…”

ECR wasn’t delivered by a stork on October 15th 2014. Its birth was years in the making. As early as 2009 President Obama commented on the need to update our “Cold War era” export control system. Companies had advance warning that they would need to reclassify their products, parts and technology under ECR. Many figured there was plenty of time to get the job done, and without any outside support. Yet as some organizations got down into the weeds, they found the reclassification process was (a) a bigger painfully slow, (b) prone to errors and inconsistencies, and (c) a drain on resources and budgets.

2. “What’s with The Order of Review, anyway?”

Many forward-thinking companies took advantage of government-sponsored ECR training, where they learned that following the Order of Review when reclassifying items and technology is a surefire way to stay compliant. But when it came to practical use of the Order of Review to support compliant decision-making, many found themselves stumped. Following multiple links and keeping track of numerous PDFs while reclassifying made the process frustrating and vulnerable to human error. Key compliance workers knew how to reclassify, but many lacked a way to simplify the process and reduce the amount of time required.

3. “What are they doing at our other division? That’s not the way we’re doing it here!”

Some companies struggled with standardizing their reclassification and licensing processes. Divisions using dissimilar workflows, acronyms and recordkeeping systems to approach reclassification of the same items made it difficult for compliance officers to catch inconsistencies, understand the justifications behind the decisions being made, and ensure that no items had slipped through the cracks.

4. “What, the government’s coming? Where did we put those files?”

Any company could face a government audit, and in the first year of ECR, many did. Some organizations were let down by their paper-based systems. Misplaced information, confusion over the location of stored files, the burden of trying to organize records in such a way that anyone who needed them could access them – it all made reliable recordkeeping a challenging endeavor. And that lead to a lot of white knuckles when it came to visits from the government.

The Good News is…

We’ve made it through the ups and downs of ECR’s first year. During these past several months many companies have found ways to ease the challenges of their reclassification obligations, using automated tools to:

• Simplify use of The Order of Review
• Make research more efficient and less laborious
• Centralize information and standardize processes
• Keep a detailed audit trail

While ECR’s arrival may have caused a shake-up, with time and experience we’ve weathered the first-year uncertainties, challenges and concerns, and will continue to do so as we reap the benefits of the reforms (reduced red tape for exporters and simplified business with our allies, among them). Let’s raise a glass to ECR and wish it many happy returns!