Isabella Peek
Compliance with international trade laws is for everyone, not just large companies. The United States international trade laws, including import controls, export controls, and sanctions regulations, are promulgated by three main departments in the federal government. The Office of Foreign Assets Control (“OFAC”) and the Bureau of Industry and Security (“BIS”) work in tandem to regulate export controls and sanctions, and U.S. Customs and Border Protection (“CBP”) mainly regulates import controls.
Many companies, both large and small, can tend toward a laissez faire attitude about compliance with international trade laws and as a result can end up sanctioned with large fines and potentially other restrictions. Complying with trade laws can be hard to navigate, especially for smaller companies, below are some basic tips to lessen the likelihood of accidental violations.
If you are regularly engaged in international exportation, have a compliance policy!
• If you are sanctioned or are investigated one of the first things OFAC or BIS checks is whether or not you have implemented and maintained a compliance policy. If you are regularly engaged in international exports, you should have a compliance policy, which should include items like:
• Ensuring potential business partners are not sanctioned (more information below)
• Ensuring that you have checked whether or not you need an export license
• Ensuring that you have made inquiries as to the final destination of your product and that you are satisfied your product will not end up in a country subject to heavy sanctions
Always run searches of potential business partners or other foreign persons you’ll be working with against the sanctions lists maintained by OFAC and BIS.
• The International Trade Administration maintains a search engine that will search against all sanctions lists at the same time, it can be found online. Assuming that the person is not on any sanctions list, make sure to either take a screenshot of the result or save the result as a .pdf just in case that person is added to a sanctions list at a later date. Not only are people on sanctions lists but vessels and airplanes are too!
Always know the origin of goods you are importing and, if applicable, the origin of the raw materials that make up your goods.
• CBP has restrictions on imports from certain source countries in protest, the most notable example being the Xinjiang region of China, which is responsible for a large amount of source materials for solar panels and other silicon based products.
Confirm that goods you are exporting do not require an export license under the Commerce Control List.
• Spoiler alert, most goods do not need an export license. A good rule of thumb is, if you are exporting machinery of any sort or software you may need an export license. If you are unsure you can submit a request on SNAPR to have BIS classify your product.
Remember that software and hardware are subject to export controls too!
• Even software and hardware need to comply with export controls. Basically, if someone in a foreign country can download your software, you too need to ensure you are complying with international trade controls. If you are unsure where to start in classifying your software or hardware, a good trick to orient yourself is to look at an ECCN matrix maintained by a large company like this one or this one.
If you do find that you have violated a trade law (even unknowingly) you should immediately voluntarily disclose the violation to OFAC or BIS, which will greatly mitigate your potential liability.
NCET is a member-supported nonprofit organization that produces educational and networking events to help people explore business and technology. More info at NCET.org.
Isabella Peek is a transactional attorney at Fennemore, a large regional west law firm with 300-plus attorneys. She has experience in advising companies on international trade compliance with a focus on export controls and sanctions.
