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There are very specific laws and regulations to be followed when dealing with exports. These laws and regulations are administered by the State Department for defense articles and services and by the Department of Commerce for dual use (i.e. military or civilian) items. They are in place to protect U.S. national security and foreign policy objectives (State) as well as to protect U.S. economic interests (Commerce).

EXPORTS are items or knowledge provided to foreign persons in the United States or abroad and to U.S. citizens in foreign countries.

Exportable items or knowledge may include, for example:

• products
• blueprints

• commodities

• drawings

• hardware

• operating instructions

• software

• technical services

• subassemblies

• proposals

• individual components

• models and prototypes

• test and repair equipment

• photographs and performance data

• executable program code

• computer data files

• technical data and/or knowledge

A foreign person is:

1. Someone who is not a U.S. citizen or a permanent resident alien
2. A foreign corporation, business association, partnership, trust, society or any other foreign entity or group that is not incorporated or organized to do business in the United States
3. International Organizations
4. Foreign governments and any agency or subdivision thereof (e.g. diplomatic mission) U.S. citizens employed by, or representing, a foreign entity

U.S. subsidiaries of corporations located outside the United States may require special review because, in some instances, they may be considered foreign persons and/or may employ foreign persons.

WHEN AND HOW DO EXPORTS OCCUR?

1. Sending or taking and controlled defense article or dual use article outside the United States or providing it to a foreign person within the U.S.
2. Disclosing (including orally or visually) or transferring technical data to a foreign person within the United States or abroad
3. Performing a defense service or behalf of or for the benefit of a foreign person in the United States or abroad
4. Escorting tours of company facilities for foreign persons
5. Publication of technical data, presentations at symposia, conferences or meetings, technical discussions and even casual conversations
6. Transferring information over international communications systems such as the internet, facsimile, video conference, and telephone conversations

The party you want to communicate with or the country involved may not even be eligible for an export license because of U.S. government prohibitions. 

ELEMENTS OF AN EXPORT LICENSE

Exports require government permission in the form of a license or written approval. The license must be specific and identify the items, services or data to be exported, and is issued for a fixed period of time.

Export licenses or approvals may be needed:

1. To provide technical data to foreign customers or suppliers
2. To return a part to a foreign supplier for repair
3. To return a part to a foreign customer after the part has been received, repaired or replaced
4. To discuss technical data with a foreign customer or supplier
5. To conduct design discussions with a foreign customer or supplier
6. To deliver hardware to a foreign customer
7. To provide proposal data to a potential foreign customer
8. To import defense articles
9. To export defense articles on a temporary basis
10. To perform any defense services for a foreign customer or supplier

Some exports may be covered under an existing license and others will require a separate license. It is possible that you may need an export license covering a product before you begin to work on a contract. In any case, before you begin any of the activity with a foreign person, be sure you have the license you need.

PENALTIES

Individuals violating the federal law and applicable regulations on exports are subject to civil and criminal penalties which include fines, jail terms, suspension or denial of exporting privileges and debarment from government contracting. 

Employees involved with exports or doing business overseas must also be familiar with the laws and regulations governing these activities, namely. The Arms Export Control Act (AECA) as implemented by the international Traffic in Arms Regulations (ITAR), the Export Administration Act (EAA) as implemented by the Export Administration Regulations (EAR). The Foreign Corrupt Practices Act (FCPA), The Office of Foreign Assets Controls (OFAC) and the Anti-Boycott Act.

ITAR – These regulations administered by the State Department require that all exports of defense articles and services and technical data on the U.S. Munitions List be Authorized by a U.S. State Department approved export license, an approved agreement or an ITAR exemption.

EAR – These regulations administered by the Department of Commerce control the export of dual use items or items as specified on the Commerce Control List (CCL).

FCPA – This act prohibits any payments, offers of money or other items of value to an official of a foreign government or a foreign politician or political party for the purpose of improperly influencing the official’s actions or decisions in helping the company get or keep business. It also prohibits making false or misleading entries in company records. (See companion "Test Yourself" brochure on FCPA.)

OFAC – This agency controls the sanctions and embargoes authorized by the U.S. which prohibit exports to or the conduct of business with certain countries and/or governments.

ANTI-BOYCOTT ACT – This act prohibits companies and their employees from providing certain types of information to foreign customers and agreeing to certain contractual provisions such a supporting embargoes not approved by the U.S..

TEST YOURSELF

You want to buy a product from a UK company to support one of your military products. The UK company produces a standard product that is used in commercial boats. In order to satisfy your military requirement, you need to provide technical data to the UK vendor explaining how to modify their standard product to meet your requirement.

1. Since the product is a standard product used in commercial boats, have you violated export control regulations by requesting a modified product?
2. If the modifications are only minor tweaks to the standard product, have I still violated export control regulations?  

Your company has recently purchased a subsidiary located in Germany. You provide technical data to the German subsidiary to enable the subsidiary to manufacture one of your products.

3. Has an export occurred?
4. Has an export occurred if the technical data was provided to a Mexican subsidiary? Mexico is a member of the North American Free Trade Association?   

You have been invited to make a presentation at a company offsite meeting to be held in Paris, France.  Your presentation slides will include technical data, but you have been told that the audience is going to be U.S. citizens only.

5. Since every participant in the Paris meeting is a U.S. citizen, is there any way you can violate export control regulations?
6. Would an export occur if you stayed in the U.S., sent the presentation slides by Fed-Ex, and presented the slides via a videoconference from Washington D.C.?

You have been instructed by the Singapore Ministry of Defense to send spare parts they purchased from you directly to a Singapore company that manages their inventory. The Singapore company is not a party to your license.

7. Since the Singapore Ministry of Defense instructed you to send the spare parts to the company, do you have an export issue?
8. Do you still have an export issue if the Singapore company comes to the United States and pick-ups the spare parts from your production facility?

You have an approved license to export a product to the Brazilian Ministry of Defense. After you received the approved license for the export of the product, the customer requested you to provide them with an enhanced version of the product.

9. Can you export the enhanced product under you current license?
10. If you have a license to export the enhanced product to the Argentine Ministry of Defense that you are not going to use, can you use this license to export the enhanced product the Brazilian Ministry of Defense?

You have been requested by the Algerian Ministry of Defense to provide them with intermediate level training for a defense article you already sold and legally exported to the Algerian Ministry of Defense.

11. Can you provide the intermediate level training without export approval? The defense article has already been legally exported to the Algerian Ministry of Defense.
12. If I am only going to provide the Algerian Ministry of Defense on-the-job intermediate level training, and not give them any tangible technical data such as manuals, do I still need export approval?.

Answers:

1. Yes, you provided technical data and assistance that explains how to modify a product to meet a military requirement.
2. Yes.
3. Yes, you have provided technical data to a foreign person.
4. Yes, the entity receiving the data is still considered to be a foreign person.
5. Yes, technical data will be exported to a foreign country.
6. Yes, you are still exporting technical data to a foreign country.
7. Yes, the Singapore company is not a party to your export license; therefore you are not able to export the spare parts to the company.
8. Yes, an export has still occurred.
9. No, export licenses are specific to include the product to be exported.
10. No, export licenses are specific to include the end-user.
11. No, providing a service such as intermediate level training requires export approval.
12. Yes, providing a service such as intermediate level training requires export approval regardless of how the training is accomplished.

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Last modified: March 11, 2006