Export Controls
Exports from the United States to foreign destinations are highly regulated. A surprisingly wide variety of goods require pre-approval and a license from the U.S. government prior to export abroad. Export controls are administered by and enforced by multiple administrative agencies, which leads to a complex regulatory environment. Although some exports of sensitive merchandise such as armaments or weapons, which are typically subject to the Department of State's International Traffic in Arms Regulations, may plainly require an export license, other seemingly innocuous “dual use” merchandise such as computer chips or even data are regulated by the Department of Commerce’s through its Export Administration Regulations. Exports to embargoed countries, such as Cuba, Sudan and Iran, are regulated by the Department of the Treasury’s Office of Foreign Assets Controls, which may allow the export of certain non-prohibited goods such as food and medicine to embargoed destinations upon request.
Civil penalties for export control violations can run to $250,000 per violation, or twice the amount of the transaction being penalized, whichever is greater. Criminal penalties may run to $1,000,000 or imprisonment. In short, U.S. export control laws are not to be taken lightly, even though many companies pay little regard to them until it is too late.
To complicate matters, the regime of U.S. export controls often lacks transparency. For instance, certain merchandise may require an export license when exported from the U.S. to one particular country, but that same merchandise may then require a license when exported to a different country. Also, exporting to a “denied party,” such as a company deemed to have links to either terrorism or nuclear proliferation, in a seemingly-innocent transaction can lead to penalties. The unique circumstances of each export transaction determine whether a license is required. Subsequent to any export, administrative recordkeeping requirement must be complied with as a matter of law and to be prepared for an enforcement audit.
We counsel companies in ascertaining the extent to which their goods are subject to export controls and prepare license applications to obtain required export licenses. Because non-compliance with export regulations can lead to significant penalties and disrupt transactions, we offer export control compliance services such as in-house seminars and training sessions so that companies can proactively confront export control issues and educate employees regarding the applicable regulations.
In addition to export licenses, there are other export-related issues that warrant counsel. For instance, are your intellectual property rights such as copyright, trademark or patent, protected in the country that you are exporting to? Are there import regulations in your destination country that may interfere with your transaction? Do not let your profitable export opportunity turn into a loss due to lack of export awareness.
