Trade Compliance Training

Export Compliance

What is an Export?

Most people know that an export is any transfer of material, equipment, technology, information, or services outside of the country. But did you know that an export can also occur when no physical product is transported?

If information about materials, equipment, technology, data, or services is shared, even inadvertently, with a foreign person or entity, this is also considered an export.

A lot of people also don’t realize that if you take an export-controlled item with you to a foreign country, for example in your hand-luggage on a flight, this is considered an export – even if you intended to bring the item back with you on your return journey.

Export controls are designed to protect national security, foreign policy, economic interests, and human rights. They help prevent sensitive and strategic materials and technologies, as well as weapons, from falling into the wrong hands.

Governments use export controls to regulate the exports of sensitive equipment, software, and technology to bolster their economic, national security, and foreign policy objectives.

Export controls may target countries, governments, companies, entities, financial institutions, non-profit organizations, and even individuals (such as terrorists or military leaders).

Violations of export laws and regulations can result in:

  • Significant fines and jail time for individuals
  • Significant fines for the company – up to twice the value of the transaction
  •  Seizure of goods
  • Loss of export licenses for a set period or permanently
  • Mandatory and comprehensive government audits
  • Reputational harm to the company

Types of Export

It’s important that you understand how exports are classified; and understand what the different classifications mean.
Exports are classified as:

  • Direct Exports
  • Re-Exports
  • Deemed Exports
  • Deemed Re-Export

Now let’s look at each classification in more detail.

Direct Exports

A direct export is any item that is sent from the country of origin to a foreign destination – either physically, electronically, or by other means.

Re-Exports

A re-export is the actual shipment or transmission of an item subject to the Export Administration Regulations (EAR) from one foreign country to another foreign country, including the sending or taking of an item to or from such countries in any manner. This means that if you ship goods from the US to France, and the goods are then shipped on to Turkey, US export controls laws still apply to the second stage of the shipment.

Deemed Exports

The release of certain technology, hardware, software, or information that is subject to EAR export regulations to a foreign national or foreign entity located (living, working, or visiting) in the country of origin is a deemed export.
“Release,” under this definition can include any written, oral, visual release, or disclosure.
For example, discussing US technical specifications, which are subject to export regulation, with a Chinese citizen working in California would be “deemed” to be an export of those specifications to China.

Deemed Re-Export

The release or transfer of technology, information, hardware, or software source code subject to the EAR to a foreign person or foreign entity of a country other than the foreign country to which the initial release or transfer took place (or is deemed to have taken place).
For example, let’s say a US company transfers its export-controlled technology to a company in country X. The receiving company in country X is going to provide that controlled technology to its employee, who is a citizen of country Y. This would be considered a deemed re-export to country Y.

This content is an extract from the trade compliance training course

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