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Alert: The Export Control Improvement Act Will Improve the Electronic Filing of Export Data and the Identification of Applicable Export License Requirements Under the Export Administration Regulations

By:  Carl E. Anderson
Related Practice Area: Business Law

U.S. companies engaged in the manufacture, distribution, or licensing of commercial commodities, software, and technology for export or re-export will be interested to know that House Resolution 3515, titled the Export Control Improvement Act, was recently introduced in the U.S. House of Representatives. Its intended purpose is to make improvements in the electronic filing of export data and to enhance enforcement authorities with respect to the Export Administration Regulations (EAR). The Export Control Improvement Act contains two subtitles: the Securing Exports Through Coordination and Technology Act; and the Export Enforcement Act of 2009.

The Securing Exports Through Coordination and Technology Act, if enacted into law, will amend Title 13, Chapter 9 of the U.S. Code and create an Automated Export System (AES), whereby exporters enter export related data into the AES and the AES automatically informs the exporter of any applicable export license requirements. Under current law, an exporter either makes such a determination from the Commerce Control List (CCL) or the exporter may submit a written request to the Department of Commerce, Bureau of Industry and Security (BIS) for a licensing jurisdiction determination. If the information entered into the AES does not satisfy the requirements of the various export control laws and regulations, the AES will issue notices, compliance alerts, and other warnings to the exporter, accompanied by references to the applicable authorities. Additionally, the AES will retain records of actions of all exporters that utilize the AES in an effort to simplify and streamline subsequent filings. The Department of Commerce is charged with oversight of the AES, including ensuring that any changes to U.S. export laws, regulations, product classifications, and excluded party lists are reflected in the AES.

The Export Enforcement Act, if enacted into law, will require a comprehensive review of export control laws and regulations to assure that: (1) exports are approved quickly for trusted partners of the United States; (2) strategic export controls effectively identify and protect technologies critical to U.S. national security interests; and (3) coordination is improved among responsible federal agencies to enhance efficiency, information sharing, and the consistent execution of export control laws. To accomplish these objectives, Special Agents at the BIS would be provided with permanent law enforcement authority that will allow them to perform undercover operations, make arrests, conduct searches and seizures, and carry firearms. BIS would also be able to search, detain, and seize goods or technology not only in the U.S. but also at locations outside the U.S. in cooperation with other countries.

The BIS maintains the CCL within the Export Administration Regulations, which includes items (i.e., commodities, software, and technology) subject to the export licensing authority of BIS. The CCL does not include those items exclusively controlled for export or re-export by another department or agency of the U.S. Government. In instances where agencies other than the Department of Commerce administer controls over related items (i.e., ITAR administered by the Dept. of State, Directorate of Defense Trade Controls), entries in the CCL contain a reference to these controls. BIS also maintains the Commerce Country Chart, which contains licensing requirements based on the destination and Reason for Control. In combination with the CCL, the Commerce Country Chart allows you to determine whether a license is required for items on the CCL to any country in the world.

U.S. companies engaged in the manufacture, distribution or licensing of commercial commodities, software, and technology for export or re-export should welcome the efficient and expedient determination of export licensing requirements capability that the proposed new Automated Export System will have. All parties to an export transaction must comply with all relevant export control regulations. The current manual procedure for obtaining an advisory opinion, classification or a determination whether a particular item or activity is subject to EAR from the BIS is time consuming and costly, particularly for smaller businesses. It must be noted that to obtain export clearance, exporters, including freight forwarders, are currently required to file export information utilizing the U.S. Census Bureau’s Automated Export System or “AESDirect” for all shipments where a “Shipper’s Export Declaration” (SED), now known as an “Electronic Export Information” (EEI), is required. This electronic export system helps streamline the export clearance process through U.S. Customs and Border Protection. For more information about these proposed regulations and how it will affect your business, please contact Carl Anderson at (717) 852-4988 or canderson@barley.com.