All companies who export should have an internal Export Management System (EMS), which includes a written export compliance manual listing the standard operating procedures for ensuring corporate compliance with all export regulations.
The EMS should contain several sections, including: 1) Administrative Elements such as management policy, responsible officials, record keeping procedures, staff training, internal audits and reviews, and problem notification procedures; 2) Order Processing Procedures for all exported products; and 3) Screening Elements that list many of the screens that will take place during order processing. These include: denied persons screens, antiboycott screens, diversion risk (red flag) screens, end user screens, product classification (Schedule B, ECCN) and license determination screens (e.g., how it’s done and keeping notes about the logic used for each selection), etc.
The corporate compliance manager should scan appropriate sections of the Federal Register daily to check for updates to U.S. federal regulations related to exports, which may be found on www.access.gpo.gov/su_docs/fedreg/frcont07.html.
It is advisable to have all domestic and foreign employees, as well as all distributors and other intermediaries, sign a document stating that they understand and agree to abide by U.S. export laws, since a company is liable for their violations. Exporters should train and periodically verify that partners are abiding by these regulations.
For domestic sales to parties who may potentially export the product, it is wise to have a written agreement stating that 1) this is a domestic sale, 2) that a company may not be used as the U.S. Principal Party of Interest (USPPI) on the Shipper’s Export Declaration (SED) if subsequently exported, 3) that they alone are responsible for complying with all U.S. export regulations if subsequently exported, and 4) that if it is subsequently exported, they are required to provide a copy of the SED and the ITN number (if submitted through AES Direct) so the producer can verify the accuracy of the information submitted to the government regarding its products.
A producer should also ask for a copy of the SED/ITN number when routed export transactions take place to verify that accurate information has been filed related to its products. “Routed” is when a U.S. exporter sells to a foreign buyer under an ExWorks Incoterm stipulating that the foreign buyer is responsible for U.S. export clearance.
Many companies and law firms offer consulting services to help create an EMS tailored to a company’s specific operations. Software is also available to automate export compliance procedures. For information on setting up a program to comply with BIS regulations, and to see a sample EMS manual, see www.bis.doc.gov/ExportManagementSystems/Default.htm.
The content in this post has been adapted from material that will appear in Going Global: A Guide to Building an International Business (Summer 2008) and is presented with permission of Thomson/West. Copyright 2008 Thomson/West. For more information or to order call 1-800-762-5272.