Cant touch it, cant see it? Its still subject to export controls

Export control is a complex matter, and companies need to scrutinise their trading relationships and business transactions regardless of whether they are doing business domestically, within the European Union, or internationally.

Most businesses are aware of export control regulations and licence requirements for physical goods’ movements. But the United Kingdom and other countries also control the transfer of ‘technology’ not in the public domain (i.e. information required for the development, production, or use of controlled materials) in the same ways as the transfers of physical goods. This includes, but is not limited to, software, instructions, working knowledge, design drawings, models, operational manuals, skills training, and parts catalogues.

The UK’s Export Control Act 2002 sets out the legislative framework for the control of strategic goods and technology. In the UK, an electronic transfer includes transfer by e.g., fax, e-mail, or telephone, from within the UK to a person or place abroad. But U.S. export controls must also be considered because any re-export of sensitive materials or technology with U.S. origin is subject to U.S. control. This may also apply to materials made outside the U.S. if the end-product is sensitive in nature and based on, or derived from, sensitive U.S.-origin technology.

In addition to controls on technical data transferred by tangible means such as e-mail, faxes and paper documents, the U.S. government also seeks to control technical data that is passed on through oral or visual means, e.g. during telephone conversations, web conferences, meetings, and skills training. Under U.S. law, an export licence may even be required to make technical data or software available to a foreign business partner during a telephone conference.

Further complicating the matter is the “deemed export” rule. The U.S. government considers the release of software or technology to a person who is not a U.S. citizen or permanent resident to be the equivalent to a physical export to that person’s country, whether the transfer takes place in the U.S. or not.

And this doesn’t just affect manufacturers and exporters. Companies outside the U.S. that are involved in research and development (R&D) activities may also require a re-export licence if using U.S.-originating export-controlled software or technology, as the outcome of the R&D itself could become subject to U.S. export control laws. Given the far-ranging nature of U.S. controls, it is important to have effective compliance programmes in place throughout the organisation.

The volumes of materials and accompanying information, and the number of parties involved in today’s supply chains make it virtually impossible to manage global trade compliance without implementing software solutions. Comprehensive global trade solutions facilitate automated processes and information exchanges throughout the supply chain to ensure compliance with all applicable laws and regulations, and add value by increasing operational efficiency, reducing costs and mitigating risks at the same time.

Software solutions have become essential for operating effective compliance programmes today, managing all aspects of export control requirements by incorporating updated, applicable legislation, standardising processes, preventing transactions, recording activities and flagging critical persons, materials or actions. They largely automate all export control activities and guide entire organisations through their obligations on a global level. As regulatory compliance directly affects operational performance, fulfilment time frames, cash flows, brand reputation and competitiveness, businesses should ensure they have the right solution in place.