Director of Engineering
Cedar Grove, N. J.
Everyone from President Obama to financial gurus and business leaders say exports are one way to lift America out of its economic malaise. But with exports come new challenges for OEMs.
Although a product’s ultimate end use can be the last thing on an engineer’s mind when designing a custom component for an overseas customer, it will determine whether or not the device falls under U. S. government export controls. The point is to keep U. S.-developed technology, intellectual property (IP), and products out of the wrong hands.
A number of federal agencies are responsible for various products that require permission to be exported from the U. S. These agencies also have databases of people, companies (Denied Parties) in the U. S. and around the world, and other countries that products and IP can’t be exported to.
Engineers and their employers need to do their homework regarding a product’s intended end use and understand their obligations under U. S. law. Export control is a serious matter. If a company does not have a well-thoughtout Export Control Compliance plan, paperwork and compliance nightmares can hinder new-product design. Luckily, making export-control requirements understood throughout an organization and establishing a program to meet those requirements can eliminate the headaches.
“Exports” by definition include data, drawings, intellectual property, and components exported to anyone not a U. S. citizen or permanent resident (green-card) alien. To determine whether or not a product falls under a particular export regime, it helps to understand the end-use application when starting a design. From here, one can narrow the search.
• Items designed, developed, or modified for a military application, and listed on the United States Munitions List, are controlled under the International Traffic in Arms Regulations (ITAR) and managed by the Dept. of State.
• Items with dual use, or used in commercial applications, are controlled under the Export Administration Regulations (EAR) and enforced by the Dept. of Commerce, Bureau of Industry and Security.
• Products going to a sanctioned country are controlled through a variety of federal laws and enforced by the Dept. of the Treasury, Office of Foreign Assets Control (OFAC).
To streamline the process, start the documentation trail early. There is great value to understanding a customer’s application early on, especially if it falls under ITAR, EAR, or OFAC requirements. First, the customer can be checked against the Denied Parties List (DPL) to prevent extra work for something the government does not permit.
If the buyer is confirmed as acceptable, have a process for documentation, document control, and verification. It is understandable that customers are protective of designs, features, and where products might ultimately be used. Everyone wants to guard proprietary knowledge and prevent the release of sensitive information. Clearly communicate with potential clients and customers to ease their fears. Create standard business forms that match requirements for export licenses and documentation. These will help the customer feel more comfortable in providing the details and protect all parties involved, as well as to keep the flow of information consistent and accurate.
Internal communication and training is also important. Designers are usually not experts on export control, so explaining the process and its importance throughout an organization helps ensure that everyone follows government rules and company guidelines.
Develop a system that catches mistakes, both internal and external. Subsuppliers might be inexperienced in the documentation process, so careful review benefits every company in the chain and protects the organization from future worries.
For smaller businesses or companies branching out into military applications, outside experts can be a valuable fall back. If your team is not familiar with export control and regulations, reach out to a third party for training or processing. Qualified consultants can help develop and implement export-control compliance plans. In addition, various companies offer services to verify information against the DPL, provide training on forms and systems, and manage the process.
With potential fines in the six figures for failures in export-control compliance, having the right system and people in place can make a big difference.
Servometer is a manufacturer of electrodeposited metal bellows, bellows assemblies, electrical contact springs, flexible-shaft couplings, and structurally rigid electroforms. For more information on export control, visit www.bis.doc.gov, www.pmddtc.state.gov/regulations_laws/itar_official.html, and www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx.
Edited by Kenneth J. Korane