It’s common knowledge that China exports heavily to the United States. But lost in the headlines about the prickly relationship between the two countries is how much the U.S. exports to China. While the trade balance remains strongly in China’s favor, the United States exports more to China each year than anywhere else in the world except Canada and Mexico—more than $150 billion in 2022, accounting for 7.5 percent of all U.S. exports, according to the Bureau of Industry and Security (BIS). These exports aren’t typically consumer goods, but rather agricultural products; industrial materials lik ..read more

Screening for denied or restricted parties is one of the most important risk management tasks in export compliance—especially for items subject to the EAR. It seems intuitive that extra care in screening for restricted parties should be given to transactions that involve the most sensitive items, such as defense articles subject to the ITAR or those military items that comprise the 600 series on the Commerce Control List. But the bigger risk may lie with organizations that export a wider variety of items subject to the EAR—particularly those classified as EAR99 and other ECCNs that typically m ..read more

The very last section of the International Traffic in Arms Regulations, Part 130, establishes rules about political contributions, fees and sales commissions related to defense trade. It’s an odd-duck piece of the ITAR, because it appears to have less to do with export controls than with enforcement of a different law altogether: the Foreign Corrupt Practices Act (FCPA) of 1977. The FCPA prohibits U.S. entities from making payments to foreign officials for the purpose of obtaining or retaining business. The anti-bribery law isn’t limited to arms sales; it can apply to anything. It was the firs ..read more

If you didn’t know where to look, it could take a long time to stumble across the U.S. rule that limits arms brokering. No such rule even existed until 1996, when Congress amended Section 38 of the Arms Export Control Act to require people involved in the brokering of U.S. and non-U.S. defense equipment and technology to register with the government, and often obtain approval for their activities. At the time, a report from the House Committee on International Relations stated: “…in some instances, U.S. persons are involved in arms deals that are inconsistent with U.S.  policy. Certain of ..read more

The United States and the European Union are two of the world’s largest trading partners. In 2021, 15.5% of all U.S. exports (by dollar value) went to EU member countries, while 17.3% of U.S. imports arrived from the EU, according to the U.S. Office of Technology Evaluation. With so much material moving back and forth, it may come as a surprise that there isn’t a full-fledged bilateral trade agreement between the two. Source: Worldtopexports.com Both the U.S. and EU export control systems are guided by four multilateral export control regimes that establish common control lists and practices ..read more

How can the United States claim export control jurisdiction over an item that isn’t made in the United States, doesn’t contain any U.S.-origin content, and is traded between parties in other nations without ever touching U.S. territory? That’s the idea behind the Foreign Direct Product Rule (FDPR), which was introduced in 1959 to place controls on the transfer of certain items made abroad with the benefit of U.S. technologies. Stated as simply as possible, the FDPR allows the Department of Commerce’s Bureau of Industry and Security (BIS) to regulate the reexport and transfer of foreign-made it ..read more

Learn the Impact of ITAR, EAR & OFAC Controls on Non-U.S. Companies, Affiliates and Transactions The Export Compliance Training Institute (ECTI), a leading provider of U.S. export controls compliance training for businesses, organizations, governments, and universities/research institutions, is pleased to present its upcoming live seminar series in Tel Aviv, Israel in January 2023. “Export controls are complex, and the rules change frequently,” said Scott Gearity, President of ECTI. “We have found that live, in-person seminars provide both novice and experienced export compliance ..read more

Some of the trickier export compliance issues to navigate are the ones related to computing technology, software and data. Export controls require a license or license exception for certain types of technical data and software, including such computing technologies as encryption [see related post: License Exception ENC and the Complications Around Encryption]. The growth of cloud computing, and the related concept of Software as a Service (SaaS), have raised new questions about how these rules apply, while simultaneously making the regulations relevant to companies that may not even realize th ..read more

Updated: April 25, 2023 By: Maarten Sengers and Scott Gearity Continuing on the theme of International Traffic in Arms Regulations (ITAR) contradictions begun in last month’s newsletter, let us turn to another ITAR contradiction that has resulted in tremendous and endless confusion on how one should properly license U.S. Munitions List (USML) technical data exports. Most practitioners know that when you provide a “defense service” you need an agreement, most commonly a Technical Assistance Agreement (TAA) (ITAR 124.1), but if you export unclassified “technical data” without providing a defense ..read more

On the Commerce Control List (CCL), items controlled in the 600 series (those with a “6” as the third character of the ECCN) are military items, most of which were previously controlled on the United States Munitions List (USML) and subject to the ITAR. Such sensitive items are generally highly controlled and require a specific Bureau of Industry and Security (BIS) license to export in most scenarios. If you export 600 series hardware, software or technology, you should expect to be applying for licenses, but there are a number of situations when items may be authorized for export without a li ..read more