U.S. AND EU EXPORT CONTROLS, EMBARGOES AND SANCTIONS –
HOW TO COPE
1. BRIEF INTRODUCTION TO U.S. AND EU EXPORT CONTROLS
A. PRINCIPAL U.S. EXPORT CONTROL REGIMES
i. Export Administration Regulations (EAR)
ii. Regulations and Executive Orders Administered by the Office of Foreign Assets
Control (OFAC)
iii. International Traffic in Arms Regulations (ITAR)
B. EU EXPORT CONTROLS
i. Controls
ii. Member State Application
a.
Example – United Kingdom
2. U.S./EU EMBARGOES/SANCTIONS
A. U.S.
i. EAR Embargoes
a. Countries
b. Persons – Denial Order and Entity Lists
c. Uses - Proliferation
ii. OFAC Regulations and Administered Executive Orders
a. Countries
b. Persons – SDN List
iii. ITAR
a. Proscribed Countries – Part 126
Program Agenda
as of 09-27-11
i.
Attempted Exports
b. Persons
iv. State Department Proliferation Sanctions
v. Iranian and Other Country/Program Specific Sanctions
a. Iran Sanctions Act of 1996, as Amended Comprehensive Iran Sanctions,
Accountability, and Divestment Act of 2010
b. Terrorism
vi. Net Scope of Embargoes/Sanctions – the Checklist
B. EU
i. Arms Embargoes
ii. Specific or General Trade Restrictions (Export/Import Bans)
iii. Financial Restrictions
iv. Restrictions on Admission (Travel/Visa Bans)
v. Other Measures
C. ENFORCEMENT
3. HOW TO DEAL WITH DUAL/OVERLAPPING CONTROLS/SANCTIONS
A. DETERMINE EMBARGO POLICY
B. DEVELOP COMPANY SPECIFIC COMPLIANCE PROCEDURES
i.
Develop Checklist, Based on Products/Markets of Factors that
May Implicate Any (U.S. and/or EU) Controls/Sanctions
ii.
Develop Guidelines for U.S. Person Employees/Directors
iii.
Internal Process for Funneling Transactions that Implicate
Controls/Sanctions for Expert Evaluation – In the event of
Multiple Applicable Provisions, the Most Restrictive Provision
Prevails
a.
Develop Guidelines for In-House Counsel
Program Agenda
as of 09-27-11
iv.
Decide What Further Verification, Including Consultation with
Agency Administering Controls/Sanctions is Appropriate
C. CONTRACTUAL CONSIDERATIONS
i.
M&A Activity
ii.
Credit Agreements and Other Financing Arrangements
Program Agenda
as of 09-27-11
OFF-SHORE PROCUREMENT AND IMPORTING INTO THE U.S. AND
EU: RISKS AND RISK MANAGEMENT
1.
IMPORTING – BASIC CONCEPTS
A.
HARMONIZED CUSTOMS PRACTICES
i.
Classification – Harmonized Tariff System
ii.
Valuation – Transaction Value
iii.
a.
Price Actually Paid or Payable
b.
Related Party Transactions
Origin
a.
Substantial Transformation
B.
VARIANCES TO STANDARD CUSTOMS TREATMENT OF
IMPORTS
2.
i.
Antidumping/Countervailing Duties
ii.
Retaliatory Tariffs/Quotas
iii.
Free Trade Agreements/Special Tariff Reduction Programs
U.S. – SPECIAL ISSUES
A.
CUSTOMS CLASSIFICATION PRACTICES
B.
RELATED PARTY PRICING
C.
COUNTRY OF ORIGIN MARKING REQUIREMENTS
i.
Repackaging Issues
D.
ANTIDUMPING/COUNTERVAILING DUTY PROCEEDINGS
E.
REQUEST FOR INFORMATION/NOTICE OF ACTION VERSUS
INVESTIGATION
Program Agenda
as of 09-27-11
3.
4.
EU – SPECIAL ISSUES
A.
IMPORT PROCEDURE
B.
COMMUNITY TRANSIT
C.
ISSUES WITH SPECIFIC IMPORTS
D.
VAT AND IMPORT DUTY AND RELIEF
E.
ANTIDUMPING/COUNTERVAILING DUTY PROCEEDINGS
F.
TARIFF QUOTAS AND SUSPENSIONS
RISKS FROM IMPORTING
A.
B.
UNEXPECTED COSTS/SUPPLY DISRUPTION
i.
Higher Duty Classifications (and Vagaries of Customs
Classification Practices)
ii.
Special Duties (AD/CVD, Retaliatory Tariffs)
PENALTIES/DETENTIONS/SEIZURES AND FORFEITURES
i.
Misstatements/Omissions in Entering Merchandise
a.
Classification
b.
Value
c.
(i)
Failure to Declare All Direct/Indirect Payments and
Assists
(ii)
Related Party Transactions
Qualification for Free Trade Agreements/Special Tariff
Reduction Programs
ii.
Other Agency Regulatory Requirements (e.g. FDA, FCC)
iii.
IP Issues
a.
Recordations
b.
Seizures
Program Agenda
as of 09-27-11
c.
iv.
C.
Broker Failures – Incomplete, Incorrect and/or Late
Documentation
REPUTATIONAL RISK
i.
5.
Section 337 Enforcement
Customs-Trade Partnership Against Terrorism (C-TPAT)
MANAGING THE RISKS OF IMPORTING
A.
DUE DILIGENCE AS PART OF THE OFF-SHORE PROCUREMENT
PROCESS
B.
C.
i.
Determination of all Duty Costs (Regular and Special Duties)
ii.
Assessment of Supply Disruption Risk (Quotas and When Supplier
is Acting as the Importer)
iii.
Assessment of Possible Sources Qualifying for Duty Reductions
CUSTOMS COMPLIANCE PROGRAM
i.
Verification of Classification and Value (and Establishing a Basis
for Acceptance of Related Party Transactions as Arms-Length)
ii.
Broker Management Practices
iii.
Voluntary Prior Disclosures
CONTRACTUAL CONSIDERATIONS
i.
Terms and Conditions of Purchase: Fight the Battle
ii.
Special Considerations for Imported Goods
a.
Importer of Record
b.
Applicable Law
c.
Pricing
d.
Delivery
e.
Payment Issues – Buyer’s Concerns
Program Agenda
as of 09-27-11
f.
Risk of Loss, Title Passing
g.
Assuring Quality and Performance: Inspection of ForeignProduced Goods
h.
Other Protective Measures
g.
Dispute Resolution
i.
Arbitration
Program Agenda
as of 09-27-11