{"id":11416,"date":"2023-09-27T09:30:57","date_gmt":"2023-09-27T16:30:57","guid":{"rendered":"https:\/\/www.qad.com\/blog\/?p=11416"},"modified":"2023-09-27T09:31:49","modified_gmt":"2023-09-27T16:31:49","slug":"the-importance-of-compliance-with-deemed-export-regulations","status":"publish","type":"post","link":"https:\/\/www.qad.com\/blog\/2023\/09\/the-importance-of-compliance-with-deemed-export-regulations","title":{"rendered":"The Importance of Compliance with Deemed Export Regulations"},"content":{"rendered":"

[vc_row][vc_column][vc_single_image image=”11417″ img_size=”full”][vc_column_text]Export management does not simply control the movement of goods, but also applies to the sharing of information. In this blog, we look at the \u201cdeemed export\u201d laws of the United States and what the restrictions mean for manufacturers and universities.<\/span><\/p>\n

Ask anyone what an \u201cexport\u201d is and they will likely define the term as <\/span>goods <\/span><\/i>\u2014 and sometimes <\/span>services <\/span><\/i>\u2014 produced in one country and made available for sale in another. While that is an export, the term encompasses far more than the movement of items or services from one country to another. The term \u201cexport\u201d can refer to any one of the following five examples:<\/span><\/p>\n

    \n
  1. The physical transfer of goods to a foreign country<\/span><\/li>\n
  2. Physically transferring information to a foreign country by carrying information on a laptop, USB or other data device<\/span><\/li>\n
  3. Electronically transferring information by uploading it to a foreign server or sending information overseas using email, text messaging or other means of electronic communication<\/span><\/li>\n
  4. Allowing foreign nationals to access information, such as databases or software<\/span><\/li>\n
  5. Other forms of communication or data transfer, including telephonic communication<\/span><\/li>\n<\/ol>\n

    You will notice that four of the five examples above refer to the transfer, electronic or otherwise, of <\/span>information<\/span><\/i>. You will also note that this information does not necessarily have to be physically sent to a foreign country \u2014 granting a foreign national access to data is the same as exporting it to a foreign country.<\/span><\/p>\n

    What is a Deemed Export?<\/span><\/h2>\n

    Manufacturers, exporters and any commercial entity that ships goods internationally must abide by export regulations. This includes screening all parties of the transaction against <\/span>restricted party lists<\/span><\/a>, validating that the country of destination or that parties to the transaction are not subject to sanctions or other embargoes, and ensuring that the licenses are valid and correct where required. For many organizations, <\/span>export management software<\/span><\/a> plays a key role in mitigating export regulatory risks.<\/span><\/p>\n

    The United States, however, also requires manufacturers and other entities to abide by \u201cdeemed export\u201d laws when sharing certain technology with, or disclosing information to, foreign nationals based in the US. Under US law, a \u201cforeign national\u201d is anyone who does not have US citizenship, or who does not have permanent residency or refugee status in the US.\u00a0<\/span><\/p>\n

    Technology and information that may be subject to deemed export laws include proprietary technology, dual use goods that have both military and civilian applications, technology controlled for physical export to a particular foreign country, or technology that includes both US and foreign inputs.\u00a0<\/span><\/p>\n

    If an item has a specific Export Control Classification Number (ECCN) and appears on the Commerce Control List (CCL), an export license from the Department of Commerce is required before you can ship the item from the US to a foreign country. These goods are also subject to deemed export laws. Manufacturers may not make such technology available to foreign nationals based in the US. Even allowing visual inspection of databases, blueprints, technical specifications and so forth could violate regulations.<\/span><\/p>\n

    Export Restrictions and Dual Use Goods<\/span><\/h2>\n

    It is not surprising that governments and regulatory bodies place restrictions on dual use goods that can have military as well as civilian applications. Should these goods fall into the wrong hands, they could support terrorist, criminal or other illegal activities.<\/span><\/p>\n

    In the United States, the Export Administration Regulations (EAR) oversees the export of commercial and dual use items. Along with EAR, the International Traffic in Arms Regulations (ITAR) is responsible for controlling the manufacture, export, and import of military goods and technologies.\u00a0<\/span><\/p>\n

    Deemed Exports and Foreign Manufacturing<\/span><\/h2>\n

    The global nature of contemporary supply chains and manufacturing can make deemed export regulations somewhat tricky to navigate. For example, technologies developed outside of the US, but that contain US-origin technology, may be subject to US deemed export regulations.\u00a0<\/span><\/p>\n

    In addition, manufacturers or other enterprises may need an export license if they employ researchers, technicians or experts that are foreign nationals. You may also need an export license if you invite foreign visitors to tour your facility.<\/span><\/p>\n

    Furthermore, manufacturers that outsource production must ensure that the production technology that they plan to send overseas is not on the CCL or subject to other government restrictions. Manufacturers will need the necessary export licenses before sending controlled production technology to foreign nationals or allowing access to this information.<\/span><\/p>\n

    Deemed Export Laws and Universities<\/span><\/h2>\n

    Deemed export laws are not restricted to manufacturers and other commercial enterprises \u2014 universities must ensure that researchers and students act in accordance with export regulations.\u00a0<\/span><\/p>\n

    Should a university conduct research on technology that has dual use applications, the university must comply with dual use restrictions. If foreign nationals are part of the research team, or if the university is collaborating with an overseas academic institution, deemed export laws are likely to apply.<\/span><\/p>\n

    It is important to note that fundamental research conducted by universities is exempt from export controls. Under US export law, this is the Fundamental Research Exclusion (FRE).\u00a0\u00a0<\/span><\/p>\n

    In order for FRE to apply, the following conditions are necessary:<\/span><\/p>\n