Obama Administration’s Export Control Reform Initiatives to Begin October 15

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Alan M. Dunn, a partner with the Washington, D.C. based international trade law firm of Stewart and Stewart, notes that violations in the past have resulted in severe criminal and civil penalties

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Reform was necessary because the current rules make exporting needlessly difficult for domestic businesses and discourage foreign companies from buying U.S. products and services

A series of major reforms to export control laws begin October 15 — changes domestic manufacturers, brokers and others who export should familiarize themselves with because violations in the past have resulted in severe criminal and civil penalties, including the imprisonment of executives.

“Even inadvertent violations have triggered seven figure fines,” said Alan M. Dunn, a former assistant secretary of commerce who is now a partner in the Washington, D.C. based international trade law firm of Stewart and Stewart. Dunn helps firms comply with federal export controls.

The reforms are part of the Obama Administration’s Export Control Reform Initiative.

“Reform was necessary because the current rules make exporting needlessly difficult for domestic businesses and discourage foreign companies from buying U.S. products and services,” said Dunn. “They do not reflect the country’s key national security concerns.”    

Export controls are restrictions on exports that have been implemented to advance U.S. interests, such as anti-terrorism, non-proliferation of weapons, weapon-making materials and technologies.

The October 15 reforms involve aircraft, gas turbines and associated equipment, as well as transition rules and clarification of a new term, “specially designed”, that will be used in classifying items on the government’s different product export control lists, Dunn said.

On October 25, a new rule on brokering will take effect. On January 6, 2014, changes become effective on vessels of war, navy equipment, military vehicles, auxiliary military equipment, and submersibles.

“Companies that produce parts, components, accessories, attachments, and software for the items involved in the reforms; companies that do not have robust export compliance programs; and companies that have relied in the past on prior government agency determinations regarding controls applicable to similar products may be particularly at risk of encountering problems complying with the revised regulations,” Dunn said.

Although the new rules provide more clarity in many cases, they also are much lengthier than the current provisions, and many vague terms still remain, Dunn said. He added that enforcing agencies sometimes interpret the regulations in ways that are not intuitive.

The upcoming reforms involve two federal export control regimes, the International Traffic in Arms Regulations and the Export Administration Regulations. Further export control reforms involving both may be expected next year, Dunn said.

About Stewart and Stewart
For 50 years, the firm of Stewart and Stewart has helped companies, workers, and governments succeed amid the complexities and rapid change of international trade. Stewart and Stewart are proud of their tradition of integrity, expertise, and creative approach to the law in such areas as trade remedies, customs, and international trade agreements. Today, more than ever, globalization is creating spectacular new opportunities and posing daunting new challenges for U.S. farmers, manufacturers and service companies. Stewart and Stewart enters its next half century blessed with a talented and tested team to assist clients in competing at home and around the world so they can create the jobs and innovations of tomorrow, survive potential challenges or crises and overcome obstacles and distortions in the marketplace.

Stewart and Stewart is a member of the International Society of Primerus Law Firms.

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Derek N. Hoeft

Alan M. Dunn, Esq.
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