Strategic export compliance implementation is required to achieve a compliance program maturity that will adequately address evolving regulatory requirements. This entails employing a business strategy that includes involvement and accountability of senior management. It should also emphasize that everyone involved in exporting regulated articles or technologies is responsible for compliance. This includes employees, contractors, vendors, and clients.
Evolving Export Regulations
U.S. export regulations have undergone significant changes years to address national security concerns. These changes have been implemented in response to geopolitical tensions and technological advancements. Several years ago export regulations were primarily focused on defense articles and technologies under the International Traffic in Arms Regulations (ITAR). In recent years, more regulations now address non-military or dual-use items under the Export Administration Regulations (EAR).
The U.S. has implemented export regulations on semiconductors to restrict access by countries like China, particularly to advanced chips and manufacturing technologies. Controls have also been placed on additive manufacturing, Pressure Gain Combustion (PGC), quantum computing, and Artificial Intelligence (AI) devices.
Enhanced Enforcement Actions
The Disruptive Technology Strike Force was launched February 16, 2023. This action was taken by the Department of Commerce, the Department of Justice, and the Federal Bureau of Investigation in an effort to prevent the unlawful acquisition of advanced technologies by foreign adversaries. To date this effort has resulted in numerous cases being filed against parties involved in sanctions and export control violations.
In addition, the Five Eyes export control agreement was created enhance the security concerns of Australia, Canada, New Zealand, the United Kingdom, and the United States. These actions minimize gaps in export compliance investigations and enforcement. Recent export compliance enforcement actions include a $252 million settlement involving Applied Materials for violations related to shipments to China, and a $1.5 million settlement with a European company for unlawful transfers of semiconductor manufacturing items.
Implementing a Strategic Export Compliance Program
The Bureau of Industry and Security (BIS) recommends developing an Export Compliance Program (ECP) that includes eight key elements: management commitment, risk assessments, export authorization procedures, training, recordkeeping, screening, compliance measures, and corrective actions. When enforcement actions are taken by the BIS, presence of these elements demonstrates compliance program maturity. A properly developed and implemented program is considered a mitigating factor when levels of penalties are determined.
A strategic export compliance program must be incorporated into day-to-day operations. It must be adequately resourced and those resources should be adjusted as business requirements change. A key element for success is consistent article classification to determine what physical items and technologies in an organization are regulated. Another important element is a documented denied parties screening program to ensure that employees, contractors, vendors and entities involved in export transactions are not on U.S. government entity lists.
Maintaining a Strategic Export Compliance Program
Modern businesses often see their strategic aims and organizational goals blunted by a number of forces. Ever present tactical “emergencies” and opportunities can blind organizations to strategic goals. Discipline is required to ensure that a compliance culture is not stifled by internal politics or organizational silos. Opportunities to harmonize export compliance, information security, and physical security requirements should be investigated and engaged in.
Once a strategy has been implemented, it must supported by infrastructure and behaviors that support the initiative. Continuous improvement must be fostered and monitored as new compliance challenges are identified. This requires program audits, feedback from employees, management involvement at all levels.
CVG Strategy Export Compliance Management Programs
Organizations involved with export must develop compliance processes that mitigate risks of violations. This involves creating compliance teams that have adequate resource allocations, documented procedures, and proper training. CVG Strategy Export Compliance Management Programs establish clearly defined policies and procedures for all departments within an organization.
These processes ensure that registration, item classifications, license applications, denied part screening, and security measures are properly performed. They also ensure that training, auditing, and record keeping are maintained according to requirements.
CVG Strategy can help you understand changes in US export regulations. We can help you build a clear and effective export compliance program. We can assist your organization with export control classifications, audits, and filings for export licenses. We can also help you form and educate your export compliance team.