Export Controls are laws and regulations that govern the transfer or disclosure of goods, technology, software, services, and funds originating in one country to persons or entities based or having citizenship in another country, even if the regulated items are not crossing an international border. In the United States, export control regulations are implemented by the U.S. Department of Commerce through its Export Administration Regulations (EAR), U.S. Department of State through its International Traffic in Arms Regulations (ITAR), and the U.S. Department of Treasury through its Office of Foreign Assets Control (OFAC). While these regulations apply to the United States or non-U.S. persons within the U.S., it’s important to keep in mind that other countries have their own export regulations, such as Germany’s BAFA and the UK Export Control Act.
What are some examples of activities that are subject to Export Controls?
- Transferring controlled information, such as technical data, to persons and entities across international borders.
- Shipping controlled physical items such as scientific equipment that requires export licenses from one country or jurisdiction to another.
- Verbal, written, electronic, and/or visual disclosures of controlled scientific and technical information related to export-controlled items to foreign persons within a country.
- Provisions of services to (or) conducting financial transactions with an embargoed or boycotted country, restricted individuals, or entities.
Why are Export Control regulations important?
The purpose of export control regulations is to control exports of goods and technology that could impact the national interests of the country imposing the regulations. These interests can include military, economic, and political concerns. Regulations are often also used to advance a country’s foreign policy goals.
Since export control regulations play a major role in the protection of national security and foreign policies, compliance is a mandatory requirement to conduct business internationally. The more international an organization’s operations are, the more challenging it can become to comply with export control regulations. Non-compliance with export controls can run the risk of significant financial penalties, jail time for individuals, and suspension of the company’s export privileges, preventing businesses from operating internationally.