Export Compliance. Facilitator: Steve Miles

Transcription

1 Export Compliance Facilitator: Steve Miles

2 Agenda for Today s Webinar Deep SenGupta, Sr. Manager Trade & Customs Advisory Services, FedEx Trade Networks Importance of Export Compliance Export Controls Do you need an Export License? Fines & Penalties How to develop an export compliance management program (EMCP) Resources Q&A 2

3 Additional Panelists In addition to our speakers, we also have others present to answer questions: Arnethia Hopson FedEx Express, Regulatory Consulting Group Kosha Mehta FedEx Services, U.S. International Marketing Lucy Stanley FedEx Services, U.S. International Marketing Trade Promotion 3

4 How to Submit Your Questions Click here to open the control panel Under Questions you will find a panel to view submitted questions and a text box to type in questions. Type your question and choose to Send Privately (only Organizers and Panelists will see) or Send to All (all attendees will see) 4

5 Disclaimer Every effort has been made to ensure the accuracy of this presentation at the time of publication, but the comments herein are necessarily of a general nature, are for information purposes only, are subject to change as regulatory requirements change, and do not constitute legal advice in any matter whatsoever. You are urged to seek specific advise on matters of concern and not to rely solely on this presentation. 5

6 EXPORT COMPLIANCE Deep SenGupta, FedEx Trade Networks 6

7 Agenda Compliance Quiz Importance of Compliance and Internal Controls Basics of Export Compliance Do you need an Export license? Fines & Penalties How to develop an Export compliance management program (EMCP) 7

8 Lets take a short Compliance Quiz Get a feel for your current knowledge level on the topic of export compliance. 1. Do you have a Export compliance department? 2. Do you have an Export Compliance Program? 3. Do you have a Compliance manual to address the handling of Export-related activities? 4. Do you have an up-to-date product dictionary with Schedule B and ECCN numbers? 5. Have employees received annual training on Export procedures? 8

9 Quiz continued 6. Do you ensure that you do not ship to prohibited end-users and embargoed destinations? 7. Are internal audits performed frequently? 8. Are all export documents & filings reviewed for accuracy? 9. Are any export discrepancies reported to the Government? 10. Do you feel confident that your company could withstand a Export enforcement audit? STOP! If you answered NO to any of these questions, then your company is taking regulatory risks. 9

10 What is an Export? Export: Actual shipment or transmission of items out of the U.S. Re-export: An item of U.S. origin or that has a U.S. connection, exported between two foreign countries Deemed Export: Any release of technology or source code subject to Export Administration Regulations (EAR) to a foreign national is deemed to be an export to the home country or countries of the foreign national. 10

11 Benefits of Compliance Companies benefit from proactively looking at export compliance rules and regulations which include cost savings. Doing it right the first time is cheaper than going back and fixing it later Demonstrated compliance will result in fewer cargo exams, penalties, information requests, and delays resulting in less cost Less cost + customs processing time = Greater competitive advantage. Importing and Exporting is a privilege, NOT a right! 11

12 Polling Question (1 of 4) Do any of you know who pays for your shipment s assessed duty and/or taxes? 1. We do the shipper 2. Our customers do the ultimate consignee 3. Our customers do the importer of record (not the ultimate consignee) 4. I don t know 12

13 Agencies That Regulate U.S. Exports The mission of the Bureau of Industry Security is to keep the most sensitive goods out of the most dangerous hands. Multiple agencies regulate the exporting of products across U.S borders. U.S. Department of Commerce Bureau of Industry and Security (BIS) Export Administration Regulations (EAR) U.S. Department of the Treasury Office of Foreign Asset Controls (OFAC) U.S. Department of State - Directorate of Defense Trade Controls (DDTC) International Traffic in Arms Regulations (ITAR) U.S. Census Foreign Trade Division Electronic Export Information U.S. Department of Homeland Security U.S. Customs & Border Protection 13

14 Dual Use Items Some items are considered to have dual use purposes and are closely monitored and regulated. NUCLEAR WEAPONS Centrifuges Mass Spectrometers Vacuum pumps High-speed/Thermal cameras BIOLOGICAL WEAPONS Bacterial Strains Growth Media Fermenters CHEMICAL WEAPONS Precursors Coolers Heat Exchangers Mixing vessels MISSILES Composites & Aluminum Alloys Machines Tools Accelerometers 14

15 Polling Question (2 of 4) Do any of your export commodities need an export license from the Commerce Department or the State Department? 1. No 0 Zero % 2. Yes 1-25 % of our items 3. Yes 26-50% of our items 4. Yes 51-75% of our items 5. Yes % of our items 15

16 Do You Need an Export License? Start Here E.A.R. 99 DO GENERAL PROHIBITIONS APPLY? NO SHIP N.L.R. NO IS ITEM CLASSIFIED IS ITEM SUBJECT TO THE E.A.R? YES UNDER AN ECCN ON THE COMMERCE CONTROL LIST? (GENERAL PROHIBITIONS 1, 2 &3) YES SUBMIT A LICENSE APPLICATION No YES YES NO EXIT THE E.A.R. E.C.C.N. DO GENERAL PROHIBITIONS APPLY? NO USING THE CCL & COUNTRY CHART, IS THERE AN X IN THE BOX? YES IS THERE A LICENSE EXCEPTION AVAILABLE? E.A.R. = Export Administration Regulations E.C.C.N. = Export Control Classification Number C.C.L. = Commerce Control List N.L.R. = No License Required NO SHIP N.L.R. YES SHIP UNDER LICENSE EXEMPTION 16

17 Five Basic Steps Follow these five basic steps to determine if you need and export license to export your products. Step 1: Determine Export Control Classification (ECCN) Check with manufacturer Work with design engineers, chemists, scientists Submit SNAP-R classification request to BIS to confirm Step 2: Check the 10 General prohibitions (Restricted party lists) Step 3: Check Country Chart - is there an X in the box? Step 4: If Yes, is a license exception available? Step 5: Apply for an Export license from BIS 17

18 Lists to Check Internet sites provide exporting companies access to information to help you do your due diligence. Links to the lists can be found online at 1. Denied Persons 2. Unverified List 3. Entity List 4. OFAC Lists 5. Debarred List 6. Changes published in Federal Register 7. alerts available from BIS 18

19 Examples of Red Flags A few items to watch for that may indicate that a deeper look may be warranted. The product s capabilities do not fit the buyer s line of business The customer has little or no business background The customer or entity is reluctant to offer information about the enduse (or end-user) of a product The product order is incompatible with the technical level of the country to which the product is being shipped 19

20 Bureau of Industry and security Office of Export Enforcement How violations happen in good companies 1.Overwhelmed by end of quarter orders and processing 2.New personnel using outdated go-by documentation 3.Export manager on vacation (cross train back up personnel) 4.Lack of communication with sales staff and foreign distributors. 5.Absence of an EMCP or written policies or controls. 20

21 Questions to Ask before Any Transaction 1.What agency has jurisdiction? Which agency has jurisdiction over the item you wish to export 2.What is it? What an item is, for export control purposes, depends on its classification, and subsequent placing on the Commerce Control List (CCL) 3.Where is it going? The country of ultimate destination for an export or re-export also determines licensing requirements 4.Who will receive it? The ultimate end-user of your item cannot be a listed end-user 5.What will they do with it? The ultimate end-use of your item cannot be a controlled end-use 6.What else will they do? Conduct such as contracting, financing, and forwarding freight in support of a proliferation project may prevent you from doing business with someone. 21

22 Polling Question (3 of 4) Do you currently have an export compliance program and process in place at your company? 1. Yes 2. No 3. I don t know 22

23 Export Management Compliance Program (EMCP) An optional program to assist exporters in complying with export controls by establishing checks and safeguards at key steps. Stricter export controls over sales, order entry, traffic, logistics, carriers, and vendors, tailored to your company s unique requirements. Promotes a best practices business environment The establishment of mechanisms within the company that provide checks and safeguards at key steps in the order processing system Employees need to know how to handle red flags (training, internal contacts, escalation, etc.) 23

24 Benefits of Implementing a Program The implementation of a quality program has many benefits. 1. Tailored to your company s unique requirements 2. Stricter export controls over Sales, Order Entry, Traffic, Logistics, Carriers, and Vendors 3. Helps to protect senior management from fines, penalties and prison. 4. Mitigating factor and voluntary self-disclosure 5. Promotes a best practices business environment 24

25 EMCP: Screening Elements 1. Determine product ECCN classifications & license requirements 2. Check the denied parties lists before order entry 3. What is the final destination? 4. Who is the end-user? 5. What is the end-use? 6. Possible nuclear, chemical, biological uses? 7. Any anti-boycott issues? 8. Checklist completed before shipping? 25

26 Best Practices for an Effective Program Implementing best practices can help ensure your program is effective. 1. Formal statement of management policy & commitment 2. Specific knowledge of Export regulatory requirements 3. Flowchart entire order process and identify contacts 4. Written manuals, documents and procedures necessary to ensure Import & Export compliance 5. Build a database for Schedule B, HTS and ECCN 6. Use SNAP-R to confirm product s ECCN 7. Effective DPL screening 26

27 Polling Question (4 of 4) Rate your comfort level about export compliance rules and regulations after today s session. 1. Not at all comfortable 2. Somewhat more comfortable 3. Comfortable 4. Much more comfortable 5. Very comfortable 27

28 FedEx Trade Networks Customs Brokerage Global Shipping Solutions & Freight Forwarding Trade Facilitation Tools Trade & Customs Advisory Services ( TCAS ) Export & ITAR Compliance evaluations Import Compliance evaluations ECCN/HTS/HS Classification C-TPAT & Cargo Security NAFTA & Free Trade Agreements OGA requirements Managed Services Training on the above topics. 28

29 Thank you for your participation! Deep SenGupta Sr. Manager - Trade & Customs Advisory Services (TCAS) Mobile: deep_sengupta@ftn.fedex.com What questions do you have? 29