export safe overview

www.exportsafe.com

EXPORTSAFE OVERVIEW

Trade Compliance Coaching

Wednesday, April 28, 2010

http://www.exportsafe.com


Copyright 2010 ExportSafewww.exportsafe.com

About

• ExportSafe is an international trade compliance firm providing small and mid sized business with export/import compliance coaching and services. We provide assistance with issues involving ITAR, EAR, Customs, OFAC and ATF.

• Our mission is to provide pertinent, precise and up to date information and guidance as it relates to export compliance. We strive to ensure that our clients understand and meet trade compliance requirements in a way that aligns with their business needs.

• ExportSafe brings over eight years of trade compliance and over 25 years of defense and aerospace industry experience to the table. Not a law firm or a regulator, we bring real world expertise to bear on problems facing companies that are dealing with trade compliance with an understanding that customization to your business is key.

• ExportSafe maintains active relationships with other compliance and regulatory experts in addition to advisors throughout the industry. In cases where legal advice is a requirement, we can provide a list of highly qualified attorneys that specialize in trade issues.

• Located in the Dallas-Ft.Worth area, ExportSafe can provide assistance to local, regional and national clients.





ExportSafe Services

• Our services include:

✓ Commodity Jurisdictions and analysis

✓ Registration

✓ Compliance Assessments and Audits

✓ Voluntary Disclosures

✓ Training in export compliance issues, onsite and virtual classes

✓ Establishment of Export Compliance Programs

✓ Compliance Manual Development

✓ Implementation of Systems to manage compliance transactions

✓ License and Agreement Preparation and Submission

✓ Liaison with U.S. Government regulators on your behalf

• Clients are billed on an hourly basis with no retainer required

✓ Rates are highly competitive

✓ No minimum hourly requirements





ITAR and EAR

• The International Traffic in Arms Regulations or the “ITAR” is under the jurisdiction of the U.S. Department of State and controls the export of defense articles and services. 22 C.F.R. §§120 et seq enact the Arms Export Control Act (“AECA”). The AECA provides the authority to control defense articles and services where the ITAR implements the law and provides guidance.

• The ITAR controls items and services on the United States Munitions List “USML”, provided in section 121 of the ITAR. The list contains 21 categories of controlled items. Items on this list and associated services require authorization to export from the U.S. Department of State.

• The Export Administration Regulations (“EAR”) under the jurisdiction of the U.S. Department of Commerce controls all imports/exports that are NOT controlled by the ITAR. The Bureau of Industry and Security (“BIS”) regulates and administers the EAR 15 C.F.R. §§730 et seq.

All exports from the United States are Controlled either by the ITAR or the EAR.





Commodity Jurisdictions

• The Commodity Jurisdiction (“CJ”) process is used to determine whether or not an item or service is covered by the United States Munitions List (USML). We will help you analyze the applicable jurisdiction by reviewing the origin and application of your article or service and create a self classification procedure where applicable.

• If self determination is inconclusive, we will assist you in filing a formal Commodity Jurisdiction request and help you establish appropriate control and authorization mechanisms after jurisdiction is determined.

• For EAR items we will assist you in identifying the Export Classification Control Number and identify in what circumstances Commerce licenses are required.

Determining whether or not your article or service is controlled under the State Department or Commerce Department is a critical first step. We will assist you in determining proper jurisdiction and classification under ITAR or the EAR.





Registration

• ExportSafe will help you with the registration process and will assist you in the evaluation and selection of persons that can act as key compliance personnel and Empowered Officials.

• Who can register✓ A US Person as defined in §120.16 of the ITAR

‣ An individual or business

✓ A foreign government

✓ A foreign person who is a broker as defined in §129 of the ITAR

• Annual registration of $2250 (or more based on number of licenses)

• Empowered Officials are U.S. Person employees that are entrusted with specific responsibility and authority to maintain and apply export compliance policies within an organization and to help ensure registrants have a level of understanding of export compliance regulations. All registrants must have at least one Empowered Official although in some cases that need not be the employee’s only job.

All persons that manufacture or export defense articles or services are required to register with the U.S. Department of State. Do you need to register if you don’t export?





Compliance Assessment and Audits

• Prior to any analysis, ExportSafe will enter into a mutual Non Disclosure Agreement to make sure that you understand that your information will be held confidentially. In certain cases, ExportSafe may recommend legal counsel to ensure the protection of client attorney privilege.

• ExportSafe works with you to determine your current state of compliance.✓ Evaluate the scope of your current compliance activities in the context of your current

business

✓ Determine deficiencies and identify trouble spots

✓ Identify any current issues that might be considered violations and suggest appropriate action

• An onsite audit is an in depth investigation that examines:✓ Your facility, security, communications

✓ Existing policies and procedures

✓ Sales, Manufacturing and Shipping records

✓ Existing business relationships

Are you at Risk? Do you understand the penalties? Can you afford to take chances? Civil fines of up to $500,000 per occurrence are just one deterrent. Criminal penalties include jail time and up to $1,000,000 per occurrence.





Compliance Manual

• A comprehensive compliance program should include a manual (printed and/or electronic) that contains the policies and procedures that guide employees in implementing your company’s program.

• Elements of an effective compliance manual will include:✓ Organizational Structure

✓ Corporate Commitment and Policy Statements

✓ Identification, Receipt and Tracking of ITAR Controlled Items/Technical Data

✓ Restricted Prohibited Exports and Transfers

✓ Record keeping

✓ Internal Monitoring

ExportSafe will assist you in the creation of a comprehensive compliance program that is tailored to address your specific criteria.

Company Standards Regulations

Efficient Workflow

Technology Control





Training

• Training is customized to meet the scope of international trade you are engaged in and is based on the latest and up to date information available from the different regulatory agencies.

• Web based and onsite classes can be provided. Choose web based training for some of your staff and classroom instruction for others. We can work with your location and schedule.

• Pricing for training varies with the number of students and level of training desired.

An ongoing training program will aid you in communicating your companies dedication to export compliance while making sure your staff knows the basics and where to turn in case of questions.

ITARGeneral Policies USML

Definitions Record Keeping

Brokers

Agreements Violations EAR





Compliance Program

Development

• A successful program will contain:✓ A corporate commitment with support from executive management

✓ Definition and communication of the corporate compliance organization

✓ Creation of Policies and Procedures that become part of the Corporate Compliance Manual

✓ Training

✓ Tracking and Monitoring

✓ Record Keeping in accordance with ITAR regulations

✓ Systems to help you manage your export transactions

A successful compliance program contains many key elements that over time become a common part of the company culture. ExportSafe will help you craft a trade compliance program that meets the needs of your company. Though common elements exist, this is not a one size fits all activity.





Exports

• Exports are defined as:

✓ Sending or taking a defense article out of the United States in any manner, except by mere travel outside of the United States by a person whose personal knowledge includes technical data; or

✓ Transferring registration, control, or ownership to a foreign person of any aircraft, vessel, or satellite covered by the U.S. Munitions List, whether in the United States or abroad; or

✓ Disclosing (including oral or visual disclosure) or transferring in the United States any defense article to an embassy, any agency or subdivision of a foreign government (e.g., diplomatic missions); or

✓ Disclosing (including oral or visual disclosure) or transferring technical data to a foreign person whether in the United States or abroad; or

✓ Performing a Defense Service on behalf of, or for the benefit of, a foreign person, whether in the United States or abroad.

ExportSafe will help you identify, define and optimize processes that will ensure compliance with current regulations. Do you understand deemed exports?





Defense Article

• § 120.6 of the ITAR defines a Defense Article as:✓ any item or technical data that exists on the United States Munitions List or is an item

that can be designated or determined by policy to be a defense article.

• An article can be determined to be controlled by the USML if it:✓ Is specifically designed, developed, configured, adapted or modified for a military

application, and;

✓ Does not have a predominant civil application, and;

✓ Does not have a performance equivalent (form, fit, function) to those of an item or service used for civil applications; or

✓ Is specifically designed, developed, configured, adapted or modified for a military application, and has significant military or intelligence applicability such that control under this subchapter is necessary.

• The intended use of an item or service after its export is not relevant in determining whether the article or service is controlled under the ITAR.

You need to identify and control access to defense articles by non U.S. Persons, even those that are your own employees.





Technical Data

• § 120.10 of the ITAR defines Technical Data as:✓ Information other than software, which is required for the design, development,

production, manufacture, assembly, operation, training, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions or documentation.

✓ Classified information relating to defense articles or services;

✓ Information covered by an invention secrecy order;

✓ Software directly related to defense articles

• The ITAR does not control information that is general scientific, mathematical or engineering principals commonly taught in schools, colleges and universities or information in the public domain as defined in the ITAR.

• Basic marketing information on the function or purpose or general system descriptions of defense articles is not considered tech data.

Technical data can present special challenges. Unlike a physical item, intangible forms of controlled articles such as computer software, emails and electronic documents may require authorization prior to export.





Defense Service

• § 120.9 of the ITAR defines a Defense Service as:✓ The furnishing of assistance (including training) to foreign persons, whether in the

United States or abroad in the design, development, engineering, manufacture, production, assembly, testing, repair, maintenance, modification, operation, demilitarization, destruction, processing or use of defense articles;

✓ The furnishing to foreign persons of any technical data controlled under this subchapter, whether in the Unites States or abroad; or

✓ Military training of foreign units and forces, regular and irregular, including formal or informal instruction of foreign persons in the United States or abroad or by correspondence courses, technical, educational, or information publications and media of all kinds, training aid, orientation, training exercise, and military advice.

• Defense Services may not include skills training when not of a military nature. For example, teaching the use of a word processing package or spreadsheet would not typically be considered a defense service. The key element is the nature of training, to whom and to what end.

Helping you understand and properly monitor the provision of defense services is a critical aspect of export compliance. Is using public domain information while providing a defense service controlled?





Mr. John Perser

• John Perser is the CEO and principal trade analyst of ExportSafe. Before starting ExportSafe in 2008, he served as a key individual and executive in a world class simulation and training organization, MultiGen. Mr. Perser was chosen to establish and administer export compliance activities for MultiGen in 2002 after MultiGen was faced with issues surrounding the sale of controlled software and services outside the United States. Successful implementation of a compliance program and the subsequent conclusion of a Consent Agreement with the U.S. Department of State provided Mr. Perser with a desire and the skill set needed to help other organizations like MultiGen avoid costly penalties and potential criminal charges. Mr. Perser has held executive, operations management and technical positions in organizations such as Texas Instruments, Kodak, Computer Associates and MultiGen-Paradigm.

• Mr. Perser is an active member of the Society of International Affairs, an internationally recognized body that provides training on a regular basis in basic and advanced topics in international trade, principally, arms export control. He publishes a blog at http://blog.exportsafe.com that deals with current trade issues and actively participates on committees and educational panels dealing with international trade. He is also a member of the Project Management Institute

ExportSafewww.exportsafe.comblog.exportsafe.com

Phone: 972-722-9185 Fax: 866-920-7023 Cell: 214-450-7053




http://blog.exportsafe.com

http://blog.exportsafe.com



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