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Date: 2017-12-02

EAR: Challenges with Controlling Exports of Technology

 In this global economy and the age of outsourcing, it is more important than ever for compliance organizations to be vigilant in ensuring exports of controlled technology do not occur without the appropriate authorizations.

 

When most people think of technology, they think of the latest and greatest gadgets available at their local Best Buy. In the world of export and the Export Administration Regulations (EAR), these finished good items are classified as equipment and found in category A of the Export Control Classification Number (ECCN) contained on the Commerce Control List (CCL), not as technology.

 

 

 

The EAR defines technology as specific information necessary for the development, production or use of a product.

 

· Development is defined as all stages prior to serial production, such as design, design research, analysis, concepts, assembly and testing prototypes, etc.

 

· Production is defined as all production stages such as product engineering, manufacture, integration assembly, inspection, testing, and quality assurance.

 

· Use is defined as the operation, installation, maintenance, repair, overhaul and refurbishing of a product.

 

This specific information takes the form of technical data (such as blueprints, plans, diagrams, models, formulae, tables, engineering designs and specifications, manuals and instructions written or recorded on other media or devices), or technical assistance (such as instruction, skills training, working knowledge, and consulting services).

 

The EAR further states that the export of technology doesn't just include the release of U.S.-origin data in a foreign country. It also includes using knowledge acquired in the U.S. in situations abroad.

 

I think it’s the ethereal nature of technology that makes it so difficult to control. Let’s face it; it is much easier to put controls in place to manage the export of physical items. Technology can exist in a physical form such as blueprints or manuals, but it can also exist in an electronic format or just be a part of an individual’s knowledge base.

 

To make things worse, it can be difficult for individuals that are not directly involved in the daily business of compliance to understand that emails, faxes or even in some instances conversations transmitted outside the United States or with foreign nationals located in the United States (deemed exports) can be restricted for export control reasons depending upon the nature of the content and/or data transmitted or discussed.

 

Preventing the Release Controlled Technology

 

What is the best way to ensure controlled technology is not inadvertently released without the required export authorizations?

 

I am not sure there is a best way. However, effective steps include employing a comprehensive training program to ensure that engineers and others in the organization working with technology understand what is considered controlled and what constitutes an export. Of course it is up to you to decide and balance the appropriate level of due diligence and reasonable care efforts employed to mitigate unnecessary risk while accommodating your specific business needs.

 

As a side note, on December 12, 2007, the Bureau of Industry and Security (BIS) revised the tools of trade provisions under license exception TMP and BAG to allow for certain temporary exports and re-exports of technology by U.S. persons or their employees traveling or temporarily assigned abroad.

 

Although this change may assist those with the need to travel with certain types of controlled technology, please keep in mind there are additional terms and conditions that must be adhered to in order to properly utilize these license exceptions. Some of the additional terms and conditions include security precautions to protect against the unauthorized release of the technology while temporarily abroad as well as restrictions on eligible employees.

 

Even though the update to these two license exceptions allow for certain exports of technology, to save on a few gray hairs, it may be a good idea to employ a travel policy that prohibits or limits the amount of controlled technical data taken abroad.


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