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The United States Government Has Some Rules That Grow Every Day
 

The United States Government Has Some Rules That Grow Every Day

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    The United States Government Has Some Rules That Grow Every Day The United States Government Has Some Rules That Grow Every Day Presentation Transcript

    • THE UNITED STATES GOVERNMENT HAS SOME ADDITIONAL RULES…. Actually these are Laws, Regulations, Rules, Provisions, Requirements and more that must be complied with! Copyright 2004-2008 James G. Shaw III cscp 1
    • The Department of Commerce • The EXPORT ADMINISTRATION REGULATIONS are know by the acronym “EAR” • Businesses must be aware of these rules as they can apply to “domestic” business as well as “export” or “international” business activities • “Ignorance is not excused” Copyright 2004-2008 James G. Shaw III cscp 2
    • The Export Administration Regulations • There are a large number of elements of control that apply to various activities • A good place to start is to become familiar with the regulations in general terms • Identify if your business comes under the provisions of the Export Administration Regulations (EAR) • The answer is probably YES. Copyright 2004-2008 James G. Shaw III cscp 3
    • THE EAR PROCESS • Learn the terminology and the terms and what their definitions are so you are clear as to the meaning of the work to be performed. • Learn about all the agencies, not just the Department of Commerce, that have impact and controls over the conduct of international trade • DOD, Treasury, State, and more….. Copyright 2004-2008 James G. Shaw III cscp 4
    • IF THE EAR APPLIES…. • Identification and classification of the products is a critical first step in compliance • The responsibility falls to the EXPORTER, also known as the PRINCIPAL PARTY OF INTEREST (PPI), and it also impacts the IMPORTER, the TRANSPORTATION SERVICES COMPANIES, and most importantly THE ULTIMATE CONSIGNEE. Copyright 2004-2008 James G. Shaw III cscp 5
    • Classify The Product • The “Commerce Control List” is the cornerstone • The items must receive a clear determination of the EXPORT CONTROL CLASSIFICATION NUMBER • Commonly referred to as the “ECCN” Number • This Number Directs Further Activities Copyright 2004-2008 James G. Shaw III cscp 6
    • NEW DATA ENCRYPTION RULES • The Bureau of Industry and Security (BIS), formerly known as the BXA (Bureau of Export Administration) has updated the regulations and restrictions on software, and given great focus on software that contains certain levels of data encryption, placing additional restrictions and prior screening requirements on these items. Copyright 2004-2008 James G. Shaw III cscp 7
    • Classify The Product • The “Commerce Control List” is to be referenced early in the development of new technology or science-related activities because there may be a number of elements of control that will need to be complied with……….and………. • “Ignorance is not excused” Copyright 2004-2008 James G. Shaw III cscp 8
    • Classification of Encryption Items • Please refer to the Department of Commerce, Bureau of Industry and Security, information for the latest rules, restrictions, pre-screening processes, and clearances prior to export for software (or hardware with software pre-loaded on it) from the United States (or if the technical content is above de minimus levels.) Copyright 2004-2008 James G. Shaw III cscp 9
    • The Commerce Control List • The government provides a web site to assist in the classification activity: • http://w3.access.gpo.gov/bis/ear_data.htm l Copyright 2004-2008 James G. Shaw III cscp 10
    • The Commerce Control List • This lists items that are subject to licensing under the authority of the Bureau of Industry and Security (BIS) • Each Export Control Classification Number (ECCN) is a 5 (or more) character string that is alpha-numeric. If significant control elements exist they will be in characters 6 thru 10. Copyright 2004-2008 James G. Shaw III cscp 11
    • The Commerce Control List • Items are listed in terms of the technical parameters or nature of the commodity • First Character: Category • Second Character: Product Group • Third Character: Reason For Control • Fourth Character: Relates to Reason For Control (e.g. third & fourth Characters) • Fifth Character: Used for Numerical Ordering Copyright 2004-2008 James G. Shaw III cscp 12
    • The Commerce Control List • The Commerce Control List is divided into Ten Categories • 0 Nuclear Materials, Facilities and Equipment, and Miscellaneous • 1 Materials, Chemicals, Microorganisms and Toxins • 2 Materials Processing – See Following Pages Copyright 2004-2008 James G. Shaw III cscp 13
    • The Commerce Control List • Ten Categories (Continued) • 3 Electronics Design, Development and Production • 4 Computers • 5 Telecommunications and Information Security • 6 Sensors and Lasers – See Following Pages for Additional Categories Copyright 2004-2008 James G. Shaw III cscp 14
    • The Commerce Control List • Ten Categories (Continued) • 7 Navigation and Avionics • 8 Marine (ships & vessels) • 9 Propulsion Systems, Space Vehicles, and Related Equipment • And EAR99 – See Following Pages for Additional Categories Copyright 2004-2008 James G. Shaw III cscp 15
    • The Commerce Control List • PRODUCT GROUPS • Identified in the second (alpha) character in the ECCN number: • A Equipment, Assemblies and Components • B Production, Test and Inspection Equipment • C Materials (raw) – See Following Pages for Product Groups Copyright 2004-2008 James G. Shaw III cscp 16
    • The Commerce Control List • PRODUCT GROUPS • D Software • E Technology • Then the specific identification of the article is made with careful consideration of the following details (3+ characters) Copyright 2004-2008 James G. Shaw III cscp 17
    • Establishing the ECCN • First, look at the Commerce Control List’s alphabetical index to get some approximate identification options for consideration • Carefully review the general characteristics of the items under consideration to arrive at the Category and Product Group first Copyright 2004-2008 James G. Shaw III cscp 18
    • Establishing the ECCN • Identify and confirm the major characteristics of the item with the ECCN listing and review all sub-paragraphs • “The devil is in the details” so do this carefully and do not rush this portion of the identification process • Select the final, most applicable characters to finalize the ECCN Number Copyright 2004-2008 James G. Shaw III cscp 19
    • More Rules To Know About • The United States Government has established a listing of “GENERAL PROHIBITIONS” that must be noted: • Review Part 736 of the EAR and become familiar with “The 10 General Prohibitions” • The 10 General Prohibitions prohibit certain exports, re-exports, and other trade conduct without a license, license-exception or determination that no license is required Copyright 2004-2008 James G. Shaw III cscp 20
    • More Rules To Know About • The 10 GENERAL PROHIBITIONS apply to items having a specific ECCN number • General Prohibitions 4 Through 10 apply to items that are EAR99 (or otherwise not found on the Commerce Control List) • The designation “EAR99” was formerly known (prior to 1996) as “G-DEST” Copyright 2004-2008 James G. Shaw III cscp 21
    • More Rules To Know About • General Prohibitions 1 through 3 apply only if the item is classified under a specific ECCN • Prohibition 1 applies to the Export and re- Export of controlled items to listed countries • Prohibition 2 applies to re-Export and Export from abroad of foreign-made items incorporating more than a de minimis amount of controlled U.S. Content Copyright 2004-2008 James G. Shaw III cscp 22
    • More Rules To Know About • The General Prohibitions should also be applied to avoid “self blinding” (also known as “looking the other way”) • Prohibitions 4 through 10 apply if the item is classed under a specific ECCN or is identified as “EAR99” (meaning items not found on the Commerce Control List – Which generally means that No Export License Is Required…… Copyright 2004-2008 James G. Shaw III cscp 23
    • More Rules To Know About • Prohibition 4 addresses the engaging in actions prohibited by a denial order (Check Denied Persons/Denied Entities Lists) • Prohibition 5 applies to the Export or re- Export to prohibited End Users or prohibited End-Uses (e.g. chemical and biological warfare-related) • Prohibition 6 applies to Export shipments or re-Export to embargoed or special destinations Copyright 2004-2008 James G. Shaw III cscp 24
    • More Rules To Know About • Prohibition 7 addresses exports for the purpose of supporting proliferation activities • Prohibition 8 applies to freight movement, in transit shipments and items to be unladen from vessels or aircraft (enroute diversion). • Prohibition 9 covers violations of any order, terms, and conditions issued by the United States Government Copyright 2004-2008 James G. Shaw III cscp 25
    • More Rules To Know About • Prohibition 10 can be called the “be watchful” rule; • Proceeding with transactions with knowledge that a violation has occurred or is about to occur. • Prohibition 10 requires brokers, carriers, consultants, and other parties to report activities to the United States Government if activities appear to violate the EAR. Copyright 2004-2008 James G. Shaw III cscp 26
    • More Rules To Know About • If Prohibitions 1 through 10 don’t apply the next step is to look for Allowed Exceptions in the EAR. • WHAT IS A LICENSE EXCEPTION? • An exception is a provision identified in the EAR ECCN with very specific conditions that must be applied to enable the use of an Export License Exception Code on the Export Documentation Copyright 2004-2008 James G. Shaw III cscp 27
    • License or Exception Under EAR? • Research the Commerce Control List to check the reasons for export control; • Look at the “Reason For Control” section directly under the ECCN category heading and License Requirements; • Example; Reason for control NS, MT, AT • Match specific controls to the Country Chart column in the EAR Copyright 2004-2008 James G. Shaw III cscp 28
    • License or Exception Under EAR? • Research additional elements of the Commerce Control List to clearly identify if the reasons for control apply; • Look at the “Reason For Control” • Match specific controls to the Country Chart column in the EAR and look for an “X” in the Commerce Control List for the destination Country Copyright 2004-2008 James G. Shaw III cscp 29
    • License or Exception Under EAR? • If an “X” is noted, look under the “License Exceptions” category below the “Control(s)” section • It may be possible to qualify for an exception to applying for a specific export license, • If no license exception is available then an export license must be obtained (a 4 to 6 week long process.) Copyright 2004-2008 James G. Shaw III cscp 30
    • REASONS FOR CONTROL: • AT = Anti-Terrorism • CB = Chemical & Biological weapons • CC= Crime Control • CW = Chemical Weapons Convention • EI = Encryption Item • FC = Firearms Control • MT = Missile Technology Copyright 2004-2008 James G. Shaw III cscp 31
    • REASONS FOR CONTROL: CONTINUED REASONS FOR CONTROL • NP = Nuclear Proliferation • NS = National Security • RS = Regional Stability • SI = Significant Item • SS = Short Supply • UN = United Nations • XP = Computers Copyright 2004-2008 James G. Shaw III cscp 32
    • COMMON LICENSE EXCEPTIONS AVAILABLE • LVS – Limited Value Shipments – Pertain to Country Group B – Identified by “LVS: $(value)” on the Commerce Control List (e.g. LVS $5000) • GBS – Group B Shipments – Pertains to Country Group B – Identified by “GBS: Yes” on the CCL • CIV – Civil End-Users Copyright 2004-2008 James G. Shaw III cscp 33
    • COMMON LICENSE EXCEPTIONS AVAILABLE • CIV – Civil End-Users • Pertains to Country Group D-1 • Identified by “CIV: Yes” on the CCL • National Security controlled items only – Caution is urged and in numerous companies secure confirmation documents from the End User (and perhaps the government of the End User) Copyright 2004-2008 James G. Shaw III cscp 34
    • COMMON LICENSE EXCEPTIONS AVAILABLE • TSR – Restricted Technology and Software – Pertains to Country Group B – Identified by “TSRL: Yes” on the CCL – National Security Controlled items only – Written Assurance – Letter can be written stating software will not be released to nationals of certain country groups (e.g. D:1 and E:2) Copyright 2004-2008 James G. Shaw III cscp 35
    • COMMON LICENSE EXCEPTIONS AVAILABLE • TMP – Temporary Exports and Re-exports – Tools of Trade – Replacement Parts – Exhibition and Demonstration – Inspection and Calibration – Assembly in Mexico – To US Subsidiary, affiliate or facility in Country Group B – Beta Test Software – Goods Returning to the USA within 1 year Copyright 2004-2008 James G. Shaw III cscp 36
    • DEEMED EXPORT EXCEPTIONS • CIV: Civil End Use – Applies to deemed exports for 3E001/3E002 technology – Requires Foreign National Review (FNR) • TSR: Technology/Software Under Restriction – Applies to technology/software under national security only for country group “B” nationals – Requires Letter of Assurance • APP: Computers – Applies to deemed exports for 4D001/4E001 software and technology (FNR required) Copyright 2004-2008 James G. Shaw III cscp 37
    • HOW ARE WE DOING? STILL CONFUSED OVER U.S. EXPORT REGULATIONS & EXCEPTIONS? • Want to try a Classification Exercise? Copyright 2004-2008 James G. Shaw III cscp 38
    • EXPORT CONTROL LAW • The preceding presentation pages are but a small portion of the substantial amount of controls that the United States places over international commerce. • Additional elements & topics include: – Import Cargo Security (C-TPAT & 10+2) – Classification for import duty calculations – Dual Use Materials (Military and Civil) Copyright 2004-2008 James G. Shaw III cscp 39