President Obama is now in California for a two-day summit with Chinese President Xi Jinping. Also as I write this entry, I’m typing on a laptop made in China while listening to music on a phone assembled in China; and drinking coffee from a steel coffee mug, the bottom of which is stamped, “Made in China.”
Without a doubt, China is a major U.S. trade partner. At the same time, I’m reading a recent press release from the Department of Justice on the arrest of a businessman as he transited Los Angeles International Airport for the attempted export of export-restricted materials to China.
The continued wave of enforcement actions against companies and arrests of individuals for violations related to exports to China highlights the care companies must take when exploring foreign markets.
Many goods and technologies are restricted for export based on national security, foreign policy, and human rights (a/k/a, “crime control”) reasons for control. As a result, both the U.S. Export Administration Regulations (EAR) and International Traffic in Arms Regulations (ITAR) restrict exports to China in various ways.
While the EAR allows a variety of transactions, many EAR items require a license for export to China and recent changes to the EAR undertaken as part of President Obama’s Export Control Reform Initiative will embargo the exports of many items subject to the EAR to China.
The ITAR embargoes the export of all articles and technical data falling under its scope to China.
The safest approach to address export control risks is to properly assess how the regulations apply to your products and technology BEFORE exploring international opportunities and by carefully vetting prospective U.S. and foreign business partners against the various prohibited party lists maintained by the Departments of Commerce, State, and Treasury. This approach can save your company valuable time and costs by focusing business development efforts on foreign markets where your company products and services can actually be sent under U.S. law. This approach can also enable your company to take advantage of a variety of U.S. Government programs focused on supporting responsible exports with China, to include the Department of Commerce’s Validated End User Program and U.S.-China High Technology Working Group.