Preventing the illegal transfer of technology isn't a single event—it's an integrated part of the ongoing human workflow of your company, consisting of numerous individual actions and cooperative behavior between employees and departments at every management level. That's why illegal technology transfer control requires a comprehensive, company-wide solution that can manage compliance effectively at every step of the process.
Step 1: Before anything else, you must determine whether any of the countries to which you intend to ship are under any form of sanction or embargo by the United States or any applicable international organization. If you discover that an intended recipient is located in a country to which it is illegal to ship, that transaction must be shut down before it begins. Therefore, all recipients must be screened against the most up-to-date Sanctions and Embargoes lists provided by the United States, United Nations, and others.
Step 2: Assuming that exporting goods to the intended country is permitted, the exporter must then find the correct classification for the goods they intend to export. Are the goods considered controlled under the United States International Traffic in Arms Regulations (ITAR)? Or are they dual-use (products that may have both civilian and potential military uses) goods controlled under the Export Administration Regulations (EAR)? You must determine the correct Export Control Classification Number (ECCN) for the products or technologies in question if controlled under the EAR; or, for defense and aerospace articles regulated under the Department of State’s Directorate of Trade Controls (DDTC), determine the correct USML category.
Step 3: If your goods are not controlled under the USML, they will fall instead under EAR jurisdiction. In many cases, these items will fall under the category of EAR99. A designation of EAR99 generally means that no license is required for their export; however, there are still restrictions on the countries to which you are permitted to ship even EAR99-designated goods. Depending on the country of destination, an exemption (from the DOS) or exception (from the DOC) may be available. If one of these exists for your destination country, this will become your authorization to ship. If no exception or exemption is available, you will require a license to ship to any of the prohibited countries. Note well that the onus is on your company to determine conclusively that your goods may be legally exported without a license.
Step 4: At the same time, you must conduct Denied Party Screening on all intended trade chain partners and end-users before the goods are shipped, in order to assure that the recipients themselves do not appear on any of the lists of unauthorized persons. This is an ongoing process that must happen for every recipient, every product, and every shipment—names are added to Denied Parties Lists every day, and so even shipments that would have been legal yesterday may be illegal today, if the recipient has been added to one of the government's lists in the meantime. Therefore, screening and rescreening of end-users for each and every shipment is an absolute necessity to avoid committing violations.
Step 5: If no exemption or exception is available, you will need to apply for a license to export your products. It is the exporter's responsibility to determine whether or not their goods require an export license, what type of license, and then to submit all the necessary documentation to receive the License through the applicable government agency. If an exporter is discovered to be exporting controlled goods without a valid license, those exports are illegal, and the consequences will be severe.
Your company must apply for the appropriate license from the proper U.S. licensing agency—depending on the type of goods and the type of license, this will be either the Department of Commerce, Department of State, or the Office of Foreign Assets Control. Applying for licenses takes significant effort and often a great deal of time before approval, so applications must be submitted well in advance of the intended date of export to assure the legality of the transaction and prevent delays that can have deleterious effects on your relationships with customers.
Step 6: Once a license has been acquired, you must continually maintain, update, and otherwise oversee all licenses in order to assure the company continues to stay compliant with export regulations as time goes on. Each license contains individual allowances and restrictions, including on shipment values and/or quantities, expiry dates, name and number of end-users, and so on. For companies exporting goods containing multiple parts, large numbers of separate shipments, and/or shipments originating from multiple different locations within the United States, this need for maintenance and oversight cannot be exaggerated. It is important to be aware of the maximum shipment volumes and quantities and/or dollar amounts specified in export licenses, so that the company’s compliance department has sufficient time to act as licenses become exhausted.
Step 7: When using any exemptions or exceptions, you must keep a detailed account of every export to assure that the shipment was conducted legally. When exporting without a license, your company is relying only on self-authorization; therefore you must always ensure that you document your qualification to show you are not violating the government's regulations. It is vital to remember that your company's responsibility is to assure that your goods do not require a license before attempting to export—if the government conducts an investigation into your export practices, you must be prepared to prove that the goods in question did not require an export license, and qualifies for the exemption or exception used. The Society for International Affairs (SIA) has put together an exemption and exception checklist that helps you make certain that you qualify for and can demonstrate that you have acted responsibly and correctly with respect to license exemptions and/or exceptions.
Step 8: Your company's Compliance Department must be aware of the expiry dates for each and every one of the company's export licenses, as well as approaching license exhaustions with respect to product volumes or dollar amounts. Some system must be in place to dispatch advance notifications, in order to have sufficient time to apply for new licenses before the current one expires. You must also track the use of licenses they have been granted on an ongoing basis, to make sure no unauthorized parties are using licenses or attempting to fraudulently use an expired license in the company's name to export goods. In addition, safeguards must be in place to ensure that the individuals in receipt of the goods are in fact the ones who are named on the license, and no one else.
STEP 9: Finally, an effective method for creating and maintaining records of all export transactions must be in place so that your company can easily prove its intent to comply with the law in the event of a government investigation. Without audit records, suspicions of export violations can never be disproven, putting your company in a potentially dangerous position, and leaving you open to financial and criminal penalties.
Hardware Export Authorization Supervision is the tool that does all this and more, allowing you to maintain control and supervision over your export licenses to assure your company remains in compliance, and operating within the boundaries of licenses in order to prevent illegal export activity. At the same time, it saves you money by automating your export control workflow, dramatically reducing the time your employees would otherwise spend manually assuring that all controlled goods and technology are shipped legally in accordance with government regulations.