August 15, 2012
Export Compliance
Cross Border Traffic
Joseph “JOE” Tosto, Jr.
Export Administration Specialist
WMTAaug15-2012
1
2
Western Maquiladora
Trade Associaton
8:00am - 10:00am
August 15, 2012
3
BIS
Bureau of Industry & Security

“DUAL USE” Items
Real World Examples
 License Exception “TMP”


RED FLAGS

Summary
4
**
$2,500 per Schedule B Rule **
has
NO bearing on BIS
Issued by Bureau of the Census, NOT BIS
 Used for compiling export trade statistics
 May also use Harmonized Tariff Schedule Number

*Schedule B book available on-line
www.census.gov/trade
For
Schedule B issues call
1-800-549-0595
Dual Use Exports


Term used to distinguish types of items covered
by EAR from those covered by Other
Government agencies with export licensing
authority.
In general, the term Dual Use serves to
distinguish EAR “Export Administration
Regulations” items that can be used both in
military and other strategic uses and in civil
applications.
6
INK PENS to NUCLEAR COMPONENTS
7
8
9
What Kind of Authorization is
Required to Export?
NO LICENSE REQUIRED
LICENSE EXCEPTION
LICENSE
VEU
10
ON-LINE ACCESS
BIS home page
v
www.bis.doc.go
E-mail
notifications Service
 Seminars
11
12
13
ECCN EXAMPLES
How to
Build an
Airplane
encryption software
14
Real World Examples

1C997 Ammonium nitrate, including fertilizers

2A226 Valves having all of the following

2B350 Chemical manufacturing facilities and

and fertilizer blends containing more than 15%
by weight ammonium nitrate….
characteristics (see list of items controlled)
equipment…..
The technical description of your items must be
known for accurate selection of ECCN.
15
How to Classify Item

Company Engineer,
Chemist or other
Technical expert

The Manufacturer

Official Request to BIS
16
Ten Categories in the CCL
(0 to 4)
ECCNs-Export Control Classification Numbers
0. Nuclear Materials, Facilities & Equipment and
Miscellaneous
1. Materials, Chemicals, Microorganisms &
Toxins
2. Materials Processing
3. Electronics Design, Development and
Production
4. Computers
17
Ten Categories in the CCL
(5 to 9)
ECCNs-Export Control Classification Numbers
5. Telecommunications & Information
Security
6. Sensors and Lasers
7. Navigation and Avionics
8. Marine
9. Propulsion Systems, Space Vehicles and
Related Equipment
18
ECCN Structure- Product Groups
5A101
Equipment,
assemblies
and
components
5B101
5C101
Test,
inspection and
production
equipment
Materials
5D101
5E101
Software
Technology
19
EAR99 EXAMPLES
blank cd’s
Automobile
User’s
Manual
20
If an item does not fall within a
specific ECCN, it is…
EAR99
Reminder:
Start at the beginning of each category
21
Other factors can trigger a license
requirement
End
Use
End
User
22
End users of concern





Denied Persons List
 Supp. 2 to Part 764
Specially Designated Nationals List
 www.treas.gov/ofac
Entity List
 Supp. 4 to Part 744
Unverified End Users
 BIS Home Page “Lists to Check”
General Orders
 Part 736, Supplement 1
23
End use concerns




Nuclear
 Section 744.2
Chemical/Biological Weapons
 Section 744.3
Missile
 Section 744.4
Support of these activities by a U.S. Person
 Section 744.6
24
LICENSE EXCEPTIONS
BIS-748P
25
License Exceptions
Part 740
Definition: An authorization that allows you to
export or reexport, under stated conditions,
items subject to the EAR that would otherwise
require a license.
Each license exception bears a three letter symbol
used for export clearance purposes.
26
Can You Use a License
Exception?

Review general restrictions (Section 740.2)

Identify all applicable License Exception(s)
 List based and transaction based
 Use least restrictive exception that is available

Each “X” (license requirement) must be overcome
27
COUNTRY GROUPS
(Part 740, Supplement No. 1)





A - Regime members
B - Less restricted
countries
C - Reserved
D - Countries of
concern
E – Embargoed*/
Terrorist Countries
* Not a complete list of
embargoed countries
28
General Restrictions
(Section 740.2)
You may not use any License Exception if any one or more of the following
apply:

Your authorization to use a License Exception has been suspended or
revoked, or does not qualify for a license exception

Export or reexport is subject to one of the 10 General Prohibitions, is not
eligible for a license exception, and has not been authorized by BIS

The item is primarily useful for surreptitious interception of wire, oral or
electronic communications under 5A/5D980 unless for official use of an
agency of the US. Government

The item is a crime control and detection instrument (described in '742.7),
unless: export is to NATO, Australia, Japan, New Zealand; item is for official
use by personnel and agencies of the U.S. government under
'740.11(b)(2)(ii) of license exception GOV; certain shotguns and shells for
personal use
29
General Restrictions, cont’d
(Section 740.2)

You may not use any License Exception if any one or more of the
following apply:
The item is controlled for missile technology (MT) reasons, with some
exceptions

The export or reexport is to a comprehensively embargoed destination (Cuba,
Iran, North Korea), unless specifically listed as available in Part 746 of the
EAR. Note: Syria, Lybia, Sudan have special controls.

The item is “Space qualified” with an ECCN listed in '740.2(a)(7)

The item is controlled under ECCN 2A983, 2D983 or 2E983 (explosives
detection), with some exceptions

Certain Micromachined Angular Rate Sensors
30
Temporary Imports, Exports and
Reexports:
TMP
(Section 740.9)

Temporary Exports and Reexports
 …One (1) year…
Tools of trade
 Kits with replacement parts
 Exhibition and demo
 Inspection and calibration
 Return of unwanted shipments
 Items refused entry
 Containers – not what is in container 
31
Temporary Imports, Exports and Reexports:
TMP
(Section 740.9)

Export of Items Temporarily in the U.S.

Assembly in Mexico -Maquiladora-

Temporary Exports to U.S. Subsidiary, affiliate or facility in
Country Group B. (Mexico is in Country Group B)

Exports of Items Temporarily in the U.S.

Item “withdrawal for export” from Bonded warehouse

Item moving “T+E” Transportation + Entry

Item moving “IE” Immediate Export
32
ASSEMBLY IN MEXICO

Maquiladora Transactions, exported to
Mexico under Customs entries that require
return to the U.S. after processing, assembly,
or incorporation into end products by
companies, factories, or facilities
participating in Mexico’s in-bond
industrialization program; provided that all
resulting end-products (or the commodities)
are returned to the U.S.
33
TEMPORARY EXPORT to U.S.
subsidiary, affiliate or facility in Mexico

Components, parts, tools or test equipment
exported by a U.S. Person to its subsidiary,
affiliate or facility in Mexico, that is owned or
controlled by the U.S. person, provided items
exported temporarily are not transferred or
reexported to a country other than the U.S.,
without prior authorization by BIS. Note: U.S.
person is defined in Part 740.9 (ix) (B); Ineligible
commodities or software, sensitive Nuclear
Activity per Part 744.2.
34
Items Moving in transit though the
U.S.
 Subject
to conditions, authorizes
export of items moving in transit
through U.S. under a
“Transportation and Exportation”
(T+E) or “Immediate Exportation”
(I.E.) customs entry made at a U.S.
Customs office.
35
Exports of Items Temporarily in the
U.S.

Exporting Foreign Origin Items temporarily
in U.S. moving in transit through U.S,
withdrawn from a Bonded Warehouse in
U.S. under “withdrawal for export” customs
entry is considered: “moving in transit”. It
is not considered “moving in transit” if
withdrawn under any other type of customs
entry or broken for processing. Part 740.9 (b)
36
Record keeping
Part 762
Provides audit trail—FIVE (5) years!!
37
RED FLAGS



There are twelve (12) RED FLAGS covered
Supplement No. 3 to Part 732 of the EAR.
We will now review the twelve (12) RED
FLAGS
RED
- Hand Out -
38
KNOWLEDGE
 Part

736, General Prohibitions, (10)
Proceeding with transactions with knowledge that a
violation has occurred or is about to occur….
And ….
 Part
772, Definitions of Terms…. Are both
parts of the EAR you, your staff and all associated
with your transactions must be aware of.
39
Bureau of Industry and security
Office of Export Enforcement
Our Mission
Keep the most sensitive
goods out of the most
dangerous hands.
40
Bureau of Industry and security
Office of Export Enforcement
Office of Export Enforcement
OEE routinely works with
various U.S. intelligence
and defense agencies for
threat assessment and the
enforcement of U.S.
Export Laws.
41
Penalties
Criminal:
10/20 years imprisonment
$250,000 fine ($1,000,000
corporation)
Civil:
$11,000/$50,000 per violation
$120,000 per national security
violation
Denial of export privileges
42
SUMMARY



Be positive your items (products, test
equipment, software & technology are properly
classified ---ECCN or EAR99--Use the EAR, follow the steps in Part 732
When making decisions, use WEB PAGE:
www.bis.doc.gov

current EAR “Export Administration
Regulations”
43
Contacts






Western Regional Offices:
(949) 660-0144 , (408) 998-8806
Washington D.C.
(202) 482-4811- dial “0”
Fine Print: The CFR “Code of Federal Regulations”,
EAR are the Regulations. Base your decisions on
the Regulations and have an export compliance
program that is updated and current!
ATTEND our Seminars, Updates and
EXPORT CONTROL FOURM!
44
Bureau of Industry and security
Office of Export Enforcement
Office of Export Enforcement
HOTLINE 1-800-424-2980

If your
competitor, or any
PERSON is
breaking the law,
help them find a
new home.
45
Optimistically Yours,

Contact me for specific “challenges” you may
face in complying with current Export
Administration Regulations!
 Joe Tosto, Jr., (949)660-0144 x 122
 joseph.tosto@bis.doc.gov
46