Export Compliance
Global California 2009
April 3, 2009
Santa Clara, CA
EXPORT CONTROL BASICS
 Export Controls are based on item, destination, end-user and enduse.
 Export controls are designed to protect the national security, foreign
policy and economic interests of the United States.
Source ; Bureau of Industry and Security Office of Export Enforcement
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PENALTIES
Criminal: 20 years imprisonment
$250,000 fine ($1,000,000 corporation)
Civil:
$250,000 max per violation
or 2 x value of export and potential
Denial of export privileges
Source ; Bureau of Industry and Security Office of Export Enforcement
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PENALTIES
 Avoid becoming an Enforcement Statistic. Make export compliance a
priority!
 Requires top-down commitment from the CEO to the warehouse.
 Look for Changes to the BIS Regulations
Example – September 22, 2008, 115 new entries to the BIS Entities List
creating a license requirement for the export of all items subject to the
EAR.
Source ; Bureau of Industry and Security Office of Export Enforcement
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BASIC COMPLIANCE TOOLS
 Have an Export Management and Compliance Plan.
 Write clear operating guidelines, distribute to all personnel and
provide training.
 Identify and publish all export control functions, responsible
personnel, and their contact information.
Source ; Bureau of Industry and Security Office of Export Enforcement
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HOW TO DESIGN A COMPLIANCE PROGRAM
 Compliance program design – there is no “one size fits all”
– Use Export Management System Guidelines
 Cited in 15 CFR sec 766 sup. 1
 Described in detail on the BIS Web Site
– Use Internal Compliance Plan Guidelines
 15 CFR sec 752.11
– Industry Best Practices
Source ; Bureau of Industry and Security Office of Export Enforcement
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PRINCIPLES OF AN EFFECTIVE COMPLAINCE
PROGRAM
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Whether the company has performed a meaningful risk analysis.
Existence of a formal written compliance program.
Appropriate senior officials responsible for compliance program.
Adequate training provided to employees.
Company effectively screens customers and transactions.
Company meets recordkeeping requirements.
Existence of internal system for reporting export violations.
Conducts and maintains results of export compliance audits.
Appropriate remedial activity taken in response to violations.
Source ; Bureau of Industry and Security Office of Export Enforcement
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EVIDENCE OF EFFECTIVE COMPLIANCE
 Documentation
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Training records
Disciplinary records for violations of company policy
Due diligence/screening checklist
Evidence of record retention
Provide results of compliance audits
Clearly written designation of responsible personnel
Source ; Bureau of Industry and Security Office of Export Enforcement
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WHAT THE EXPORTER MUST KNOW
 Correct product classification: This is the exporter’s responsibility
– classify, verify, and document!
 Identify all parties to a transaction; verify legitimate intermediaries
and name ultimate consignee on export records.
Source ; Bureau of Industry and Security Office of Export Enforcement
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“KNOW YOUR CUSTOMER” GUIDANCE
 Be Aware of Diversion Risks!
 Lists you must check prior to export:
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Denied Parties
Embargoed countries
BIS Listed Entities
BIS General Orders
 Exercise due diligence where Red Flags are present; refrain
from/report questionable transactions.
Source ; Bureau of Industry and Security Office of Export Enforcement
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“KNOW YOUR CUSTOMER” GUIDANCE
 Research customers – internet is a great place to start.
 Whenever practical talk to new customers about their markets and
product applications.
 Learn to identify and recognize “Red Flags”.
 If there are “Red Flags” inquire.
Source ; Bureau of Industry and Security Office of Export Enforcement
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EXAMPLES OF DUAL USE ITEMS
NUCLEAR WEAPONS
Centrifuge
High Speed Thermal Cameras
Mass Spectrometer
Vacuum Pumps
BIOLOGICAL WEAPONS
Bacterial Strains
Coated Valves and Pumps
Fermenters
Presses
CHEMICAL WEAPONS
Precursor chemicals
Coolers/Heat Exchangers
Mixing Vessels
MISSILES
Composites
Machine Tools
Filament Winding Equip
Accelerometers
Vibration Test Equipment
Source ; Bureau of Industry and Security Office of Export Enforcement
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HOW VIOLATIONS HAPPEN IN GOOD COMPANIES
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Overwhelmed by end of quarter orders and processing.
New personnel using outdated go-by documentation.
Export manager on vacation (cross train back up personnel).
Lack of communication with sales staff and foreign distributors.
Source ; Bureau of Industry and Security Office of Export Enforcement
13
INCOMPLETE/INCORRECT EEI INFORMATION
 Incorrect ECCN
 Improper use of NLR (No license required)
 Incorrect Ultimate Consignee
 If your forwarder completes your AES filing, ensure shipping
instructions are clear and defined
Source ; Bureau of Industry and Security Office of Export Enforcement
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FAILURE TO INFORM ON LICENSE CONDITIONS
 Identify all license conditions and identify any conflict with the
sales transaction.
 Resolve any conflicts before proceeding with transaction. Even if
this means amending the license!
 Notify intermediate and ultimate consignees of all BIS license
conditions.
 Submit all reporting as required by BIS license.
Source ; Bureau of Industry and Security Office of Export Enforcement
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Summary
 If you identify a violation, immediately assess and contain problem,
work with your management to evaluate the benefits of voluntary
disclosure to BIS/OEE.
 Disclosures related to failure to obtain one-time review for use of
the ENC exemption receive favorable treatment and are encouraged.
Source ; Bureau of Industry and Security Office of Export Enforcement
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FedEx® Global Trade Manager
Your free, online shipping assistant
Common Challenges International
Shippers Encounter:
 Missing, incorrect or improperly completed documents
 Complying with regulations and laws
FedEx Global Trade Manager
September 2008
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FedEx Global Trade Manager Solutions
 With FedEx Global Trade Manager, you can:
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Find the proper documents required for international shipping
Prepare, store and reuse customs documents online
View advisories concerning your shipment
Research country profiles
Search an up-to-date international denied-party-screening database
Use product profiles to manage your commodity information
FedEx Global Trade Manager
September 2008
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Find International Documents
 This tool helps you determine and print the documents needed to
accompany your international shipments, both express and ground,
thereby helping to ensure a smooth customs clearance
FedEx Global Trade Manager
September 2008
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Find International Documents
 Enter your origin and destination countries
 Select whether you’d like FedEx® Global Trade Manager to help you
find the particular documents you need for this shipment or to show
you all the available documents pertinent to the import and export
countries and shipment type you specified
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September 2008
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Find International Documents
 Enter the product information, including:
– The name of the product
– The Harmonized System Code (you can search for this right on
FedEx® Global Trade Manager)
– The customs value
– The country of manufacture
 You have the option to save the product information in a product profile for fast
and easy access at a later time
FedEx Global Trade Manager
September 2008
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Find International Documents
 View the list of recommended documents for your shipment,
or a document list based on the import and export countries
 Some of the most frequently used documents are available
for online completion, including the Commercial Invoice,
the Pro Forma Invoice, the NAFTA Certificate of Origin,
the Certificate of Origin and the packing list
FedEx Global Trade Manager
September 2008
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Document Preparation Center
 Prepare, store and manage customs documents online. Save time
avoiding duplicate entry of information when you save document
profiles and reuse documents for future shipments.
FedEx Global Trade Manager
September 2008
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Document Preparation Center
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To begin, select one or more documents from to complete them
online, and either print or click Ship to prepare your shipment.
Save document profiles for international shipments to edit and
reuse a set of documents when you repeat similar shipments.
Also initiate a similar shipment with your document profiles.
Each document profile relates to an international shipment you
have already prepared. You can easily search and sort to access
your profiles efficiently. You can also customize your view.
FedEx Global Trade Manager
September 2008
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Document Preparation Center
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Save partially completed documents
to come back and finish at a more
convenient time.
Select a pending document profile to
resume preparation and complete or
to delete as needed.
Prepared customs documents are
stored in the Document Archive for complete visibility.
View and modify each document or create a document profile to
reuse the document for future shipments.
Upload your company lettered to be used with your Commercial
invoice and also upload a signature image for customized and
professional documents.
FedEx Global Trade Manager
September 2008
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Document Preparation Center
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All prepared customs documents are stored in the Document
Archive for complete visibility.
View and modify each document or create a document profile to
reuse the document for future shipments.
Upload your company lettered to be used with your Commercial
invoices and also upload a signature image for customized and
professional documents.
FedEx Global Trade Manager
September 2008
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Advisories
 This feature gives you important regulatory information for the
import and export side of your transaction, as well as for the
commodity you are shipping
FedEx Global Trade Manager
September 2008
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Advisories
 Enter your origin and destination countries, transaction currency,
and shipping and insurance charges
 Enter the product information, including:
– The name of the product
– The Harmonized System Code (you can search for this right on
FedEx® Global Trade Manager)
– The customs value
– The country of manufacture
 You have the option to save the product information in a product profile for fast and
easy access at a later time
 FedEx Global Trade Manager prepares a report containing the
applicable shipping advisories that you need to know about
FedEx Global Trade Manager
September 2008
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Country Profiles
 Provides an overview of essential, country-specific shipping
information and regulatory requirements, including demographics,
business information and statistics
 This resource enables you to research a country upfront for
sourcing decisions before you ship
FedEx Global Trade Manager
September 2008
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Denied Party Screening
 Identifies individuals, companies and other parties that have been
denied the privilege of engaging in international business
transactions
FedEx Global Trade Manager
September 2008
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International Resource Center
 Here you’ll find several useful tools and resources designed
to make international shipping accessible and straightforward,
including:
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International shipping checklist
International shipping reference guide
Global trade links
FedEx international
shipping resources
FedEx Global Trade Manager
September 2008
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FedEx Global Trade Manager
 FedEx Global Trade Manager is just one more way FedEx can help
simplify your shipping, saving you time and money and boosting
your productivity
 Log in today at https://gtm.fedex.com/GTM to see how easy it is!
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September 2008
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Thank You
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