Export Controls & Economic Sanctions
U.S. and foreign companies of all sizes must know that U.S. laws and regulations govern the export and re-export of commodities, the transfer of technology, software, services, and information to foreign nationals and destinations in foreign countries. In some cases, these laws can prohibit transactions in certain countries or with certain parties, while in other instances an export license may be required. Highly regulated fields include the aerospace and defense, commercial, electronics, medical products, and other high-tech sectors.
The Department of Commerce, Bureau of Industry and Security (BIS) issues and enforces the Export Administration Regulations (EAR) that apply to commercial and “dual-use” goods. Some re-exports from foreign countries of commodities, software and technology from the U.S. are also under the jurisdiction of BIS.
The Department of State, Directorate of Defense Trade Controls (DDTC) has jurisdiction over military defense articles, technical data related to those defense articles, and “defense services.” These export goods and services are governed by the International Traffic in Arms Regulations (ITAR).
The U.S. also has several embargo and economic sanctions programs against certain countries and groups, most commonly known are those against Cuba, Iran, North Korea, Sudan, and Syria. The Department of the Treasury, Office of Foreign Assets Control (OFAC) administers and enforces these economic and trade sanctions programs.
Each of these legal regimes influences a broad range of business activities ranging from mergers and acquisitions to hiring employees who are foreign nationals and from operating overseas subsidiaries to forming strategic alliances such as distributorships in foreign markets and joint ventures in with foreign partners.
Civil fines against companies, disciplinary actions against employees, revocation or suspension of export privileges, and even criminal prosecution are the penalties that U.S. and non-U.S. companies face for violations of export controls and economic sanctions. Properly submitted mitigating factors can substantially reduce the range and severity of potential penalties.
The firm regularly advises U.S. and foreign parties on a range of issues under export controls and economic sanctions. Representative matters include:
- Advised supplier on Bureau of Industry & Security criminal investigation regarding alleged violations of the Iran Transaction Regulations, including preparation of written submission and representation of client in proffer session before BIS investigators and Department of Justice prosecutors.
- Assisted Canadian pharmaceutical company evaluate potential sale of medicine through U.S. subsidiary to Iranian distributor, including submission of company’s first OFAC license application under the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA) Program.
- Ongoing advice to oil/gas sector manufacturer on economic sanctions compliance and business opportunities relating to Burma, Iraq, Libya, and South Sudan, including OFAC licensing requirements, and “deemed export” licensing requirements under the EAR. Assisted company in preparing an invitation to foreign oil ministry officials to meet and have an on-site visit at the company’s facilities.
- Advised defense contractor on “deemed export” regulations under the EAR and advised on negotiation of non-disclosure agreement with leading California research university to ensure compliance with export controls while accommodating university’s policy regarding foreign national researchers, including assessing “fundamental research” exemption under export controls.
- Ongoing advice to publicly-traded manufacturer regarding commodity jurisdiction determination of products sold to U.S. and foreign militaries and ITAR registration and Empowered Official compliance requirements.
- Advising U.S. subsidiary of German laser manufacturer on EAR and ITAR compliance requirements, including commodity jurisdiction determinations and “deemed export” screening and compliance for foreign national employees.
- For an industry-leading supplier of specialty materials, advised on Iran economic sanctions program to assist in developing the company’s export compliance program, including review of sales of potential concern and advising on voluntary self-disclosure (VSD) regime.
- Assisting U.S. subsidiary of UK aerospace supplier regarding commodity jurisdiction request to remove item from USML, as well as advising on upcoming export control reforms and potential for ITAR-controlled products to become controlled under EAR, as well as potential Manufacturing License Agreement strategy.
- Prepared opinion letter for Italian aerospace engineer regarding new U.S. employment opportunities under current H-1B visa and ability to work on EAR and ITAR-controlled projects.
- For an international public relations and technology firm, advised the company on Libya sanctions regulations and OFAC licensing issues to assist it assess a prospective strategic alliance with a Libyan charitable organization.
- Advised defense contractor on hiring of foreign national and permanent residency status and assessed possible restrictions or “deemed export” licensing requirements under the EAR and ITAR, allowing for the successful hiring of the candidate.