All C-level executives are justifiably concerned with risk management. Best practices in export compliance will reduce exposure to steep fines and penalties. Here is some information from the BIS (Bureau of Industry and Security) website showing details. For help with export compliance contact mitch@52.91.45.227

Penalties

Violations of the Export Administration Act of 1979, as amended (EAA), 50 U.S.C. app. §§ 2401-2420 (2000), and the Export Administration Regulations, 15 C.F.R. Parts 730-774 (2007) (EAR) may be subject to both criminal and administrative penalties. When the EAA is in effect, criminal penalties can reach 20 years imprisonment and $1 million per violation. Administrative monetary penalties can reach $11,000 per violation, and $120,000 per violation in cases involving items controlled for national security reasons. When the EAA is in lapse, the criminal and administrative penalties are set forth in the International Emergency Economic Powers Act (IEEPA).

On October 16, 2007, President Bush signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act, Public Law No. 110-96, amending IEEPA section 206. The Act enhances criminal and administrative penalties that can be imposed under IEEPA and also amends IEEPA to clarify that civil penalties may be assessed for certain unlawful acts. Criminal penalties can reach $1,000,000 and 20 years imprisonment per violation and the administrative penalties can reach the greater of $250,000 per violation or twice the amount of the transaction that is the basis of the violation. See Endnote below.

Violators may also be subject to denial of their export privileges. A denial of export privileges prohibits a person from participating in any way in any transaction subject to the EAR. Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.

Here is a great post by Deep SenGupta on LinkedIn.  His Trade Compliance scorecard is a very useful tool.

Mitch Kostoulakos CTL,LCB commented on:

Increase your international trade compliance score

Deep SenGupta on LinkedIn

The past 12 years have been an incredible experience for me as I had the opportunity to develop and manage the international trade consulting practice for one of the world’s largest logistics companies! I have also had the…

 

Engineering firms, software companies, researchers, manufacturers, and universities need to be aware of the “deemed export” rules. They may be engaged in export transactions without even knowing it. Here is some info from the BIS website.

For help with exports contact mitch@52.91.45.227

Deemed Export FAQs

• What is the “deemed export” rule?

  An export of technology or source code (except encryption source code) is “deemed” to take place when it is released to a foreign national within the United States. See §734.2(b)(2)(ii) of the Export Administration Regulations (EAR). For brevity, these questions and answers refer only to “technology” but apply equally to source code.

• What is a “release” of technology?

  Technology is “released” for export when it is available to foreign nationals for visual inspection (such as reading technical specifications, plans, blueprints, etc.); when technology is exchanged orally; or when technology is made available by practice or application under the guidance of persons with knowledge of the technology. See §734.2(b)(3) of the Export Administration Regulations (EAR).

• What is “technology”?

  Per Part 772 of the Export Administration Regulations (EAR), “technology” is specific information necessary for the “development,” “production,” or “use” of a product. The General Technology Note states that the “export of technology” is controlled according to the provisions of each Category.” It further states that “technology required for the development, production, or use of a controlled product remains controlled even when applicable to a product controlled at a lower level.” Please note that the terms “required,” “development,” “production,” “use,” and “technology” are all defined in Part 772 of the EAR. Controlled technology is that which is listed on the Commerce Control List.

• When do I need to apply for an export license for technology under the “deemed export” rule?

  Assuming that a license is required because the technology does not qualify for treatment under EAR99 and no license exception is available, U.S. entities must apply for an export license under the “deemed export” rule when both of the following conditions are met: (1) they intend to transfer controlled technologies to foreign nationals in the United States; and (2) transfer of the same technology to the foreign national’s home country would require an export license.

A couple of recent projects in which Ad Hoc Logistics was engaged included determining  proper Incoterms. Here is info from a 2014 post on Incoterms. For help contact mitch@52.91.45.227

Incoterms are rules used to facilitate global trade. Incoterms were created and are administered by the International Chamber of Commerce and are updated every 10 years. Incoterms 2010 published by ICC Services Publications, Paris FR is a very good reference. Some of the important points covered in the book are:

• Incoterms must be in the contract of sale to apply
• > 120 countries have endorsed Incoterms 2010
• Now 11 rules in 2 groups
• 2 new rules deal with geographic place
• Incoterms is not a law…older versions can be used as long as all parties agree
• Incoterms replaces Uniform Commercial Code (UCC) in domestic commerce
• for reference  www.iccbooksusa.com
• Incoterms cover;
  • Who does what
  • Who pays for what
  • When risk of goods passes from seller to buyer
  • Who is responsible for insurance, export clearance, import clearance, and other costs pertaining to delivery of goods
• Incoterms do not cover;
  • Ownership or title to goods
  • Payment terms
  • Detailed requirements
  • Complete contract of sale

Incoterms 2010 includes several rules changes:

• Now referred to as rules not terms
• Remove DAF DES DDU DEQ
• New Rules  DAT DAP
• 2 Groups…Any Mode and Ocean/Inland Waterway Only
• Any Mode…EXW FCA CPT CIP DAT DAP DDP
• Ocean or Inland Waterway Only…FAS FOB CFR CIF

Attached chart is a quick guide to Incoterms 2010

Incoterms 2010 Quick Reference Chart 120610