By Arijana Hoormann

1. Export Matchmaker St. Louis Missouri October 22, 2012 By Arijana Hoormann

2. Objectives • Define Compliance • Understanding Export Controls • Why Comply??? • Gaining basic understanding of Export Control Agencies • Export Documentation • INCOTERMS Overview • Denied Parties Lists • Schedule B Classification and EEI • Internal review and control procedures • What do I do now? Where do I start? • What does this training mean for me?

3. Why Are Exports Controlled? 3

4. Why are Exports Controlled? • National Security • Foreign Policy • Domestic Policy- Short Supply 4

5. Before we start… • Current world population is about 6.8 billion people • Current U.S population is 310 million which makes up 4.5% of world population • U.S Government wants you to export!!! ( March 2010 National Export Initiative) • U.S Government is supporting and aiding exports as long as they are in accordance with the federal rules and regulations • Export is a privilege which can be revoked • The Continental Congress passed the very first export regulations which restricted trade with Britain in 1775 • Most changes and growth for export regulations came after World War 2 and with the creation of higher technologies • Being enforced much more today than ever before • Chances of doing something that results in penalties are higher • CBP is regulatory enforcement body on behalf of other agencies

6. Compliance!! • Definition: a: The act or process of complying to a desire, demand, proposal, or regimen or to coercion b: conformity in fulfilling official requirements • What does Compliance mean to us ???? • Understanding federal regulations regarding control of exports and complying with those in our day to day operations. • Making sure we follow the company’s policies and procedures in regards to export controls • Recognizing if company even has necessary controls in place and if not figuring out how to get there. • Understanding who is who in the world of export controls. • Recognizing Red Flags and potential non-compliances (non conformance with the federal regulation or your company’s policy) • Knowing where to go in order to find the answers to problems and issues. • Knowing how and when to elevate issues. • Coming across as an educated professional when talking to our customers and vendors. 6

7. Why comply??? • Export Administration Regulations 758.3- Responsibilities of Parties to the transaction • All parties that participate in transactions subject to the EAR must comply with the EAR. Parties are free to structure transactions as they wish, and to delegate functions and tasks as they deem necessary, as long as the transaction complies with the EAR. However, acting through a forwarding or other agent, or delegating or re-delegating authority, does not in and of itself relieve anyone of responsibility for compliance with the EAR. • Freight forwarding agents, carriers and others who participate in transactions that are subject to EAR are also responsible for complying with the EAR.

8. Why Comply? • Avoid bad publicity • Avoid delays of your shipments • Avoid loss of export privileges • Avoid fines and penalties • Avoid imprisonment • Build a good name for your company and pride in your employees • Build reputation for your company in case you need to get yourself out of a bad situation

9. Who is Controlling Exports? • U.S. Department of Commerce • U.S. Department of State • U.S. Department of the Treasury • U.S. Department of Justice • Nuclear Regulatory Commission 9

10. U.S. Department of Commerce • Offices involved in Exports • BIS- Bureau of Industry and Security • Bureau of Census • Regularity Publications • EAR – Export Administration Regulations (15CFR parts 730 thru 744) issued by BIS • FTSR- Foreign Trade Statistic Regulations (15CFR part 30) issued by Bureau of Census • Why is this department involved? • Controls the Export of Dual Use Items (BIS) • Collects Trade Data and Statistics (Bureau of Census) • Contact Information • http://www.commerce.gov/ • Main Phone Number: 202-482-2000 10

11. U.S. Department of State • Offices involved in Exports • DDTC- Directorate of Defense Trade Controls • Regularity Publications • ITAR- International Traffic in Arms Regulations (22CFR Parts 120 thru 130) • Why is this department involved? • Controls the Export of Military Items • Contact Information • http://www.pmddtc.state.gov/ • Main Phone Number: 202-663-1282 11

12. U.S. Department of Treasury • Offices involved in Exports • OFAC- Office of Foreign Assets Control • ATF- Bureau of Alcohol, Tobacco and Firearms • Regularity Publications • Foreign Assets and Transactions Controls (31CFR Parts 500-590) issued by OFAC • Tobacco, and Firearms Production (27CFS Parts 1 thru 273) issued by ATF • Why is this department involved? • Issues Sanctions Regulations (OFAC) • Special Procedures applicable to Alcohol, Tobacco and Firearms (ATF) • Contact Information • http://www.treas.gov/offices/enforcement/ofac/ • Main Phone Number: 202-622-1657 or 1-800-540-6322

13. U.S. Department of Justice • Offices involved in Exports • DEA- Drug Enforcement Administration • Regularity Publications • Food and Drugs (21 CFR Part 1311 thru 1313) • Why is this department involved? • Controls Export of Controlled Substances • Contact Information • http://www.usdoj.gov/ • Main Phone Number: 240-276-0132 13

14. Nuclear Regulatory Commission • Offices involved in Exports • Office of Internal Programs • Regularity Publications • Energy (10CFR Part 110) • Why is this department involved? • Nuclear Materials • Contact Information • http://www.nrc.gov/ • Main Phone Number: 301-415-2344 14

15. U.S Department of Interior • Offices involved in Exports • Department of Interior • Regularity Publications • Bulletins to several publications • Why is this department involved? • Controls exports of endangered species and wild life, migratory birds, bold and golden eagles • Contact Information • http://www.doi.gov/ • Main Phone Number: 202-208-3100 15

16. Export Documentation • Destination countries CUSTOMS authorities require certain commercial and special-purpose documents to be provided by the shipper in order for an importer to obtain CUSTOMS CLEARANCE. Under most DELIVERY TERMS (INCOTERMS) it is the sellers responsibility to provide such documents to the buyer. These requirements vary by country, type of commodity, and status of the importers, and often require specialized knowledge and forms.

17. General Documents

18. Special Documents • Certificate of Origin • Packing Declaration • Legalized Invoices and Packing Lists • Phytosanitary Certificate • Food Safety Inspection Certificate • Inspection Certificate • Fumigation Certificate • Health Certificates • Shippers Declaration of Hazardous Cargo • MSDS- Material Safety Data Sheet • Letter of Credit Documentation

19. INCO Terms

20. License Determination • Questions to ask yourself when determining if license is required … • What are you exporting? • Where are you exporting? • Who will receive your item? • What will your item be used for?

21. Who will receive your item? • Now it’s time to talk about denied parties • Screen: Every party!!! Every time!!!! • Denied Persons List • A list of individuals and entities that have been denied export privileges. Any dealings with a party on this list that would violate the terms of its denial order is prohibited. This list is issued by Bureau of Industry and Security • Unverified List • A list of parties where BIS has been unable to verify the end-user in prior transactions. The presence of a party on this list in a transaction is a “Red Flag” that should be resolved before proceeding with the transaction. • Entity List • A list of parties whose presence in a transaction can trigger a license requirement under the Export Administration Regulations. The list specifies the license requirements that apply to each listed party. These license requirements are in addition to any license requirements imposed on the transaction by other provisions of the Export Administration Regulations. • http://www.bis.doc.gov/entities/default.htm

22. More lists to check • Specially Designated Nationals List • A list compiled by the Treasury Department, Office of Foreign Assets Control (OFAC). OFAC’s regulations may prohibit a transaction if a party on this list is involved. In addition, the Export Administration Regulations require a license for exports or reexports to any party in any entry on this list that contains any of the suffixes "SDGT", "SDT", "FTO", "IRAQ2" or "NPWMD". • Debarred List • A list compiled by the State Department of parties who are barred by §127.7 of the International Traffic in Arms Regulations (ITAR) (22 CFR §127.7) from participating directly or indirectly in the export of defense articles, including technical data or in the furnishing of defense services for which a license or approval is required by the ITAR. • Nonproliferation Sanctions • Several lists compiled by the State Department of parties that have been sanctioned under various statutes. The Federal Register notice imposing sanctions on a party states the sanctions that apply to that party. Some of these sanctioned parties are subject to BIS’s license application denial policy described in §744.19 of the EAR (15 CFR §744.19).

23. Shippers Export Declaration (SED/AES/EEI) • When is SED (AES/EEI) required? • When is SED (AES/EEI) not required? • When is SED (AES/EEI) filed? • Title 15- Part 30 FTR • Locate Schedule B number

24. Red Flags! • The customer or purchasing agent is reluctant to offer information about the end-use of a product • The product’s capabilities do not fit the buyer’s line of business; for example, a small bakery places an order for several sophisticated lasers. • The product order is incompatible with the technical level of the country to which the product is being shipped. For example, semiconductor manufacturing equipment would be of little use in a country without an electronics industry. • The customer has little or no business background. • The customer is willing to pay cash for a very expensive item when the terms of sale call for financing. • The customer is unfamiliar with the product’s performance characteristics but still wants the product

25. Red Flags- Continued • Routine installation, training or maintenance services are declined by the customer. • Delivery dates are vague, or deliveries are planned for out-of -the-way destination. • A freight forwarding firm is listed as the product’s final destination. • The shipping route is abnormal for the product and destination. • Packaging is inconsistent with the stated method of shipment or destination. • When questioned, the buyer is evasive or unclear about whether the purchased product is for domestic use, export or re-exports • Something just doesn’t look right!!!!

26. Steps to Success • Write what you do! Do what you write! Prove it!

27. Steps to Success • Learn the Rules (Get training! Keep it up to date) • Classify all your technology and commodities( U.S. Munitions Lists or Commerce Control Lists, Schedule B Classification) • Conduct denied parties screening on all parties involved in transaction • Get license timely or make sure you qualify for license exemption • Prepare export documentation in accordance with the rules and your customer needs • Keep good records • Prevent violation with an internal Export Compliance Program • If violations occur, report them ! • Don’t be afraid to sell internationally !!! (remember- 95% of all consumers are outside of the Unites States) • Call me if you have any questions 

28. Did we accomplish today’s objectives??? • What do I do now? • Where do I start? • What does this training mean for me? 28

29. Any Questions? 29