Regulation of Exports Chapter 15 2005 Thomson West

Regulation of Exports Chapter 15 © 2005 Thomson/West Legal Studies In Business 1

Why Control Exports? • Not sell goods and technology to countries that might affect national security • But after the “cold war” ended, who is the enemy? 2

Multilateral vs. Unilateral Controls? • Unilateral: U. S. has its laws to control exports just as many other countries do • Multilateral: COCOM disbanded, now Wassenaar Arrangement (1996) which is much looser • All countries do not agree on control necessary 3

U. S. Controls • U. S. law expired but extended by executive order under the authority of IEEPA. Both Clinton and Bush had to use this method • Congress can not agree on new law • Export Administration Act • USA Patriot Act 4

Times Publishing v. United States • The NYT sought the release of information under the FOIA about export licenses to Cuba under the EAA. The District Court agreed saying that the lapse in the EAA rendered the confidentiality provisions void. • The Court of Appeals reversed the District Court and held that the confidentiality provisions did not lapse and was maintained by the extension of the provisions via Executive Order. 5

Export Controls On: • Exports commodities and technical data • Re-exports commodities and technical data • Exports and re-exports from foreign country a product with U. S. parts • Exports and re-exports products from foreign country products based on U. S. technical data 6

U. S. Controls • Why did the U. S. law expire? • Why did the president have to extend by Executive Order? • Problem with Congress and inability to agree • Partisanship 7

Reasons for Control • • AT CB CC CW EI FC MT NS Antiterrorism Chemical and Biological weapons Crime Control Chemical Weapons Convention Encryption Items Firearms Convention Missile Technology National Security 8

Reasons for Control • • • NP RS SS XP SI Nuclear Nonproliferation Regional Stability Short Supply Computers Significant Items 9

Antiboycott Law • Illegal to comply with boycott imposed by a foreign country against a country that is friendly to the U. S. • Briggs and Stratton v. Baldridge: U. S. company thought by saying it had no business with Israel, it would not be violating the law. The court found the company had violated the law. 10

Case • Israel Aircraft v. Sanwa Business 11

Effectiveness of Export Law? • How effective are controls if another company from another country will sell the product? 12

Mechanics • • What item? Going where? Who will use? For what purpose? 13

Mechanics of Export Control • License • Foreign availability • Diversion - illegal placement of goods in hands of individual who would not be granted a license • Deemed Export? • Necessity of export management system 14

Penalties • TDO: table of denial orders • U. S. v. Elkins, $6, 600, 000 fine and 10 year sentence upheld for illegal export of planes 15

Business Implications • Appoint knowledgeable person to handle export compliance • Be aware of warning signs of illegal activity • Work for export law change if your company is adversely affected by export restrictions • Role of business in affecting trade law? 16