The Regulation of Exports
REGULATION OF EXPORTS
Export regulation is an act aimed at providing control, registration and regulation of imports and exports and to make provisions for matters connected with this act. In this article we shall look into the history of U.S. export controls, current export laws and concurrent of other nations with U.S. laws and the enforcement of these laws. In conclusion we shall examine the assessment of the effectiveness and necessity of such controls and their impact on business.
HISTORY OF EXPORT CONTROLS
The U.S. utilized export controls from the early 1900s in response to war or emergency conditions, these controls were later introduced after World War II. But after this war U.S. and U.S.S.R. who were allies fighting Germany became enemies and hence the continuation of export controls. Restrictions on exports were based on: national security, foreign policy or preservation of materials in short supply (Export Control Act of 1949). This act was altered by congress “to regulate commerce with foreign nations”. In 1949 the U.S. and six European countries formed the Coordinating Community for Multilateral Export Controls (COCOM). More acts were being enacted in the U.S. and with escalating U.S.-Soviet tensions relating to Cuba, the Mutual Security Act was strengthened with the aim to hinder the export of goods and technology which would make a significant contribution to the military potential of any other nation(s) which would prove detrimental to U.S. national security.
LEGAL FRAMEWORK DEVELOPMENT
In Western European and North American countries, technology inflow is relatively free but the varying interpretations of national antitrust limitations bring in the principle issues in those countries. The conviction that no one should provide military or economic advantage to the enemy has lead the U.S. and its allies to control export of arms, technology, military commodities and other strategic commodities(technical data, components and chemicals).The government agencies that handle control of exports are: Department of commerce, Bureau of export administration, Department of State office of Defense Trade Controls, Department of treasury office of Foreign Assets Control, Department of Defense, Department of Energy (nuclear area) and the intelligence community.
PURPOSE OF CURRENT LAW
Currently the law aims at ensuring a high priority for export is given to U.S. citizens except when such controls are necessary to further fundamental national security, foreign policy, or short supply objectives. Controls apply to 4 types of transactions:
Commodities and technical data export from the U.S.
Re-exports of U.S.-origin commodities and technical data among foreign states.
Export and re-export from a foreign country of products with U.S.-origin parts.
Export and re-export from a foreign country of U.S. technical data based products(products made from U.S.-origin research and technical data)
REASONS FOR CONTROL
Factors that have led to export control are: Antiterrorism, Chemical and Biological weapons, Crime control, Missile technology, National security, Nuclear nonproliferation, Regional Stability, Short supply and Computers.
PROBLEMS WITH CONTROL
The dilemma of export controls therefore is that: if one refuses to supply the desired goods to the “enemies,” then someone else will. As a result, not only will the ‘enemy’ country have the technology, but U.S. businesses will have lost a sale. This issue has brought about disagreements between the U.S. business communities and the defense establishment.
Secondly these controls may be used to suit other interests for instance the U.S. was once faced with copper shortage since most suppliers were getting a better price in Europe.
Some companies may undergo frustrations as a result of the ever-changing regulations and conflicting information.
After controls have been abolished the member countries exporters are unable to compete effectively with the already established exporters of other countries.
Power politics in export control: U.S. export control laws have reflected objectives that often conflict; this is so due to the fact that as the U.S. tries to encourage export but not at the expense of national security interests and foreign policy objectives. With the dynamic relationship of the U.S. and other countries, this export dilemma will continue to exist.
MECHANICS OF THE LAW
Export control regulations breakdown export control into 29 steps with the following basic questions: What is the item? What’s the destination? Who’s the consumer? What’s the purpose of its use?
The control steps are:
Items under jurisdiction of another agency.
Public availability of the items.
Are they re-exports of U.S.-origin goods?
Are they foreign goods made with de minimis U.S. parts?
Are they foreign made items with more than de minimis U.S. parts?
Are they foreign made items with U.S.-origin technology?
A classification of the item on the Commerce control list (CCL)
Cross checking whether license is required.
Prohibitions also do exist and they include:
Export and re-export of controlled items to listed countries.
Re-export and export from abroad of foreign-made items with more than a de minimis amount of controlled U.S. content.
Re-export and export from abroad of foreign produced direct product of U.S. technology.
Action prohibited by denial order.
Export or re-export to prohibited end use or end user.
Export to embargoed destination.
Export supporting proliferation activity or encryption.
Shipment through countries considered ‘enemy’ by the U.S.
Violation of license or regulation.
Proceeding with transaction with knowledge of a violation.
For any controlled item an exporter must obtain a license however the challenge of licensing come in whereby exporters are unable to do business in a timely manner and at the same time comply with the law. Automation of this licensing process via computerization has been employed to try and cut down on delays. Additionally if a product is available from another source besides the U.S. export controls are insensible and hence the U.S. will have to decontrol to avoid business loss.
EXPORT MANAGEMENT SYSTEM
This system aims at eliminating law compliance problems by maintaining records as well as internal audits and notifications of BXA in case of irregularity due to the dynamism of export laws.
By provision of severe penalties for violators of the EAA the U.S. has been able to enforce these laws. For instance the knowingly violating, conspiring or attempting to violate any provisions of this act leads to a fine of not more than five times the value of the export or $50,000 whichever is greater or face 5 year imprisonment or both. More penalties have also been put into place depending on the magnitude of the offence.
Even now the major issues in export control are: the true definition of the enemy, will there be effective multilateral controls? Ability of commerce department to control and promote exports.
Thus in conclusion, it is fair to state that export control is still a major issue for the U.S. especially with the change of relationship and the complex definition of one’s enemy.