Exports

Export controls are highly technical and complex: we take pride in understanding your industry and products.

Torres Trade Law represents clients before the various government agencies administering export controls. These export regimes include items governed by the International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR), and Foreign Trade Regulations (FTR or Census regulations). These laws regulate the transfer of goods, technology, software, services and information to foreign nationals and foreign destinations. We have successfully assisted companies with export compliance audits, export compliance classification projects, export licenses, technical assistance and manufacturing license agreements, commodity jurisdictions, and classification requests (CCATS).

We also assist clients with internal export audits, government inquiries, subpoenas, and investigations in both the civil and criminal side of enforcement. We work extensively with officials at the Department of Commerce Bureau of Industry and Security (BIS) and the Directorate of Defense Trade Controls (DDTC) under the Department of State.

We can also develop and implement export compliance programs for our clients. We minimize our client’s regulatory liability, minimize disruption of business, and efficiently manage company resources. We have experience in some of the most complex areas of export compliance, including but not limited to issues involving encryption technology, e-commerce transactions, deemed exports, global supply chain issues, information technology, aerospace and defense.

Representative Matters Include:

• Commodity jurisdiction rulings, product and technology classifications, and advisory opinions
• Export license applications, license amendments and transfers, license requirements, and exception requirements
• Commodity jurisdiction rulings, product and technology classifications, and advisory opinions
• Regulatory compliance in corporate reorganizations, mergers & acquisitions and asset purchases
• Deemed exports and transfers of technical data or manufacturing process sharing
• Internal investigations, voluntary disclosures, negotiation of settlements, and enforcement
• ITAR registrations, notifications, brokering, and Part 130 reporting
• Encryption and technology transfers, and software export / re-export rules, including de minimis software and technology filings to the Commerce Department
• Deemed export and re-export requirements and compliance
• Assistance with commercial flow-down export requirements in prime contractor-subcontractor and OEM-supplier relationships
• Compliance policies, procedures and training

Representative Industries:

• Aerospace & defense/commercial aviation
• Chemicals & pharmaceuticals
• Commercial electronics
• Computer hardware & semiconductors
• Cyber security
• Data processing
• Energy & power generation - nuclear & fossil fuel
• Engineering & construction
• Financial services
• Force protection services
• Industrial process controls
• IT infrastructure & encryption
• Machine tools
• Medical equipment
• Military electronics
• Oil field services
• Satellite & unmanned vehicles
• Semiconductors & microcircuits
• Software
• Special and composite materials & metals
• Telecommunications

Export Control FAQs

1. What are export controls?

Export controls are laws and regulations that restrict the transfer, sale, or dissemination of sensitive goods, services, technologies, and information to foreign countries or foreign nationals. These controls are implemented by governments to protect national security, safeguard economic interests, prevent the proliferation of certain weapons, and ensure that sensitive technologies are not shared with adverse parties. Export controls can apply to a wide range of items, including military equipment, advanced technologies, software, and certain forms of information sharing. Export controls may consist of the imposition of licensing requirements, end-use or end-user restrictions, and full prohibitions depending on the nature of the item being exported and its destination.

2. What are the main legal authorities for export controls in the U.S.?

There are two key sets of export control regulations in the United States – the Export Administration Regulations (“EAR”) (15 C.F.R. Part 730 – 780), and the International Traffic in Arms Regulations (“ITAR”) (22 C.F.R. Part 120 – 130). The EAR governs the export of certain military and aerospace items, dual-use items (i.e., items that may have both commercial and military applications), and general commercial goods, technology, and software. The ITAR generally governs the export of more sensitive items including defense articles and related items such as military aircraft, firearms, sensitive chemical and explosives, defense services, and technical data.

3. What government agencies are responsible for administration of U.S. export controls?

The U.S. Bureau of Industry and Security (“BIS”), an agency within the Department of Commerce, is the government agency responsible for the administration and enforcement of the EAR. BIS has the authority to review export license applications and approve the export of items subject to the EAR. It also can investigate violations of the EAR, initiate administrative enforcement actions, and promote compliance with U.S. export controls through outreach activities within the U.S. and abroad. The Directorate of Defense Trade Controls (“DDTC”), an agency under the U.S. Department of State, is responsible for the administration and enforcement of the ITAR. Similar to BIS, DDTC has the authority to review and approve export license applications with respect to items subject to the ITAR and can initiate investigations and administrative enforcement actions against parties that violate the ITAR. Other agencies have various roles related to U.S. export controls, including the Nuclear Regulatory Commission, the U.S. Census Bureau, which collects export statistics, and other agencies.

4. Who must register with the DDTC?

Any person, including entities, who in the United States engages in the manufacturing, export, or temporary import of defense articles, or the provision of defense services must register with the DDTC as described in Part 122 of the ITAR. In addition, any person engaged in brokering activities involving defense articles or defense services must register with DDTC as described in Part 129 of the ITAR. Importantly, registering with DDTC does not automatically grant a party authorization to export or otherwise distribute defense articles or services. Instead, the process of registering with DDTC is typically a prerequisite to obtaining a valid export license from the agency.

5. How do I determine if my product requires an export license?

To determine if your product requires an export license, you must first assess which set of export control regulations (i.e., the EAR or ITAR) governs the export of the product. This review generally begins with determining the classification of the subject item under the ITAR or EAR. The classification process includes a review of the product descriptions on the United States Munitions List (“USML”) and the Commerce Control List (“CCL”). If a subject item is described on the USML, the ITAR will govern the export of the item. If the subject item is not described on the USML, then the item is generally subject to EAR jurisdiction. Once the applicable set of regulations has been identified and the classification of the product has been confirmed, the exporter can assess the specific export licensing requirements based on that classification and the destination country as well as additional controls related to end-use and end-users set forth in the ITAR or EAR.

6. What is an Export Control Classification Number (“ECCN”)?

An Export Control Classification Number (“ECCN”) is an alphanumeric code used to identify specific items—such as products, software, or technology—that are controlled under the EAR. ECCNs are found on the Commerce Control List (“CCL”) in Supplement No. 1 to Part 774 of the EAR. Each ECCN is accompanied by a description that categorizes items based on their type, technical characteristics, and potential applications. Based on the applicable ECCN for a subject item, an exporter can determine whether an export license is required under the EAR depending on the destination country, end-user, and end-use for the subject export.

7. What is the United States Munitions List (“USML”)?

The United States Munitions List (“USML”) is a product list maintained under the ITAR that identifies defense articles, defense services, and related technical data that are specially designed, developed, or modified for military use. Items on the USML are divided into 21 categories that include firearms, military vehicles, aircraft, satellites, explosives, and related components and technologies, among others. Generally, these items are subject to stricter export controls compared to many items listed on the CCL (governed by the EAR). Exporting or even sharing technical data about items on the USML with foreign persons—whether abroad or within the U.S.—typically requires prior authorization (i.e., an export license) from DDTC.

8. What if my product is not described under any of the USML categories or under any ECCNs on the CCL?

Determining the correct export classification for a subject item can be a challenging process that requires a meticulous, in-depth review of an item’s technical aspects and relevant USML entries or ECCNs. In general, if an item is not described on the USML, it is likely not subject to control under ITAR and instead controlled by the EAR. If an item is not described in any ECCN under the EAR, it is possible that the item may be classified as EAR99, a type of “catch-all” category of items subject to EAR jurisdiction that are less controlled. Importantly, the misclassification of an item can lead to serious export control violations where the item is exported without proper authorization. Depending on the nature of a subject item (e.g., sensitive technology, defense applications, aerospace or satellite parts, etc.), an exporter may need to seek guidance from export counsel or submit a classification request to the relevant government agency (i.e., DDTC or BIS) to determine the proper classification of a subject item under the ITAR or EAR and confirm whether an export license must be obtained.

9. What are deemed exports?

A deemed export refers to the release or transmission of controlled items, data, or information to foreign nationals within the United States. Under the EAR and ITAR, such a release or transmission is considered an export of that item to the foreign national’s home country, even if no physical shipment occurs. Examples of deemed exports include sharing technical data related to the manufacturing or production of a controlled item with a foreign national employee, providing foreign national employees with access to workspaces containing controlled items or data, and sharing drawings or blueprints with a foreign national, giving a foreign national access to controlled software or equipment, or allowing them to work on sensitive research. In many cases, this requires an export license, just as it would if the item were being physically sent overseas.

10. How do export controls apply to encryption items and software?

The EAR contains provisions controlling the export of certain identified software and items utilizing encryption. Exports of these types of products are a common area of confusion and potential violations due to the technicality of software classifications under the EAR, complexity of related export controls for these products, and increased risk of misapplication of license exceptions. It is important for exporters of software to be aware that exports of seemingly harmless applications, or intangible digital transfers, can be subject to licensing requirements under the EAR and often require a careful classification analysis and evaluation of potential license exceptions. For more information on the export of software products and common compliance errors, see our article here.

11. What is BIS’s role in promoting antiboycott compliance?

Aside from its primary role in enforcing U.S. export controls, BIS is also responsible for the monitoring and enforcement of violations of the U.S. Anti-Boycott Act of 2018 and antiboycott provisions set forth in Part 760 of the EAR. U.S. antiboycott laws and regulations discourage U.S. parties from engaging in business activities that support a boycott maintained by a foreign country against another country that is friendly to the United States. Under these authorities, U.S. parties are generally prohibited from entering agreements refusing to do business with a boycotted country and disclosing a party’s business relationships with a boycotted country or blacklisted person. Importantly, U.S. companies are required under antiboycott authorities to report receipt of boycott-related requests to the BIS Office of Antiboycott Compliance (“OAC”).

12. What are the consequences of violating U.S. export controls?

A party that violates U.S. export controls can become the subject of an administrative enforcement action by BIS, DDTC, or other relevant government agency. Violations of the EAR can lead to civil monetary penalties of up to $374,474 per violation, or twice the value of a subject transaction, whichever is greater. Violations of the ITAR can lead to civil monetary penalties of up to $1,271,078 or twice the amount of a subject transaction, whichever is greater. Willful (i.e. criminal) violations of U.S. export controls may also be prosecuted by the U.S. Department of Justice and result in fines of up to $1,000,000 per violation and a prison sentence of up to 20 years. Violating parties may also have their prior export licenses revoked, subject property seized by the government, and be subject to a denial order restricting their ability to export.

13. What should you do if you discover you have a potential export control violation?

Once a potential export control violation has been discovered, a party should take immediate action to stop the conduct that resulted in the violation and prevent the violating activity from continuing further. It is also good practice for a party that has discovered a potential violation to consult internal or external legal counsel for guidance on options related to remedial actions and next steps. In some cases, a party involved in a potential violation may choose to voluntarily disclose the potential violation to BIS, DDTC, or other relevant government agency. Voluntarily disclosing a violation of U.S. export controls can reduce the risk and severity of a potential enforcement action and monetary penalties. For more information on voluntary self-disclosures of export control violations see our VSD Handbook.