Atmosphere of increased enforcement
The recent ZTE case with its staggering $1.19 Billion penalty for the chinese company’s export violations to Iran and North Korea has caused the export community to sit up and take notice. Commerce Secretary Ross issued a clear message that the Trump administration will vigorously enforce export laws and punish export violations.
“We are putting the world on notice: the games are over,” said Secretary Ross. “Those who flout our economic sanctions and export control laws will not go unpunished – they will suffer the harshest of consequences. Under President Trump’s leadership, we will be aggressively enforcing strong trade policies with the dual purpose of protecting American national security and protecting American workers.”
When I had the privilege of serving on the President’s Export Council Subcommittee on Export Administration from 2011-2016, I always tried to use my role on this private sector advisory committee to the Bureau of Industry and Security (BIS) to communicate to the BIS that its high penalty provisions ($250,000 per export violation) actually prevented many US exporters from expanding into new global markets. I was often reminded by officials in the Office of Export Enforcement (OEE) that over 95% of all voluntary disclosures ended in a warning letter from the BIS, with no monetary penalty.
How can an exporter reduce its risk of a penalty for an export violation?
Over the past year, the BIS has issued 2 important documents to help companies understand and reduce their risk of an export penalty.
1. Last June, the BIS issued a final rule updating its guidance on “Charging and Penalty Determinations in Settlement of Administrative Enforcement Cases”.
The guidelines make civil penalty determinations more predictable and transparent to the public. This BIS rule also sets forth the aggravating & mitigating factors that the OEE considers when setting penalties in export violations. It is important to highlight that the existence of a Compliance Program that complies the BIS’s Export compliance guidelines is listed as an important factor.
2. In January of this year, the Office of Exporter Services issued revised “Export Compliance Guidelines – The Elements of an Effective Compliance Program” to assist in developing an exporter’s compliance program. This useful document contains information on the elements of an effective Export Compliance Program (ECP) and how to build a program suitable for your company or organization.
For more information on the steps that you can take to develop an export compliance program and minimize your company’s export penalty risk, we invite you to attend a webinar on this subject “Export Compliance-Best Practices”