International Business and Trade Regulation Client Advisory
Managing Exporter Liability in a Global Economy
When any business decides to export its products, it becomes an active participant in the ever-expanding global economy. Enterprising companies can take advantage of exciting opportunities to increase sales and penetrate new markets. However, in the post-9/11 environment, exporters must be cognizant of a host of federal statutes and regulations that may apply to their products.
When considering entry into the global economy , businesses must inform themselves on a variety of issues. At a minimum, exporters should ask themselves:
- Is a special U.S. export license required? Must U.S. export control approval be obtained?
- Are there any active trade embargoes, boycotts or sanctions with respect to the foreign country to which I am selling such as Iran , Iraq , Burma , North Korea , Sudan , Syria , Cuba , Zimbabwe , or the Balkans region?
- Will the proposed export transaction violate any
U.S. or foreign anti-diversion, anti-boycott or
- Will the export arrangements violate the U.S. Foreign Corrupt Practices Act, the OECD Anti-Bribery Convention or the foreign country’s anti-corruption laws?
If you are actively exporting goods, it is imperative to be knowledgeable on the above issues. Companies that do not give these questions due diligence run the risk of governmental investigations which can be costly and embarrassing. The United States government has instituted a complex legal framework to regulate the export of American products in accordance with U.S. foreign policy and national security objectives. Accordingly, the Departments of Commerce, State, Defense, and Treasury, among others, administer and enforce trade regulations that can potentially impact the export of a U.S. manufactured product to a customer overseas. Failure to comply with these regulations can lead to civil and criminal investigations with penalties including, but not limited to, hefty fines and/or jail time. Several American corporations have recently paid large penalties due to export violations.
E.D. Bullard Company and Bullard Gmbh Settle Charges of Illegal Exports
The Commerce Department’s Bureau of Industry and Security (BIS) charged that E.D. Bullard of Cynthiana , Kentucky , and its German subsidiary committed 61 violations of the Export Administration Regulations (EAR) between February 2000 and March 2002. The company was charged with exporting without proper license and making false statements on the shipper’s export declarations.
E.D. Bullard agreed to pay a $330,000 civil penalty for allegations that it shipped thermal-imaging cameras without a license. The cameras were exported to Austria , the Czech Republic , France , Germany , Israel , Spain , Switzerland and Venezuela in violation of EAR.
Bullard Gmbh, a Bonn , Germany-based subsidiary, also agreed to pay a $36,000 civil penalty to settle charges that it resold, re-exported and transferred thermal-imaging cameras to Austria , France and Switzerland in violation of U.S. export controls.
3-G Mermet Corporation Settles Charges of Attempted Unlicensed Export
BIS charged that on Jan. 13, 2003 , 3-G Mermet, a Cincinnati based company, attempted to ship interior window shade fabric through its parent company, Mermet S.A. of France , to Iran without obtaining prior authorization from the Office of Foreign Assets Control (OFAC), a branch of the U.S. Department of Treasury. BIS also charged that 3-G Mermet knowingly sold the interior window shade fabric with an ultimate destination of Iran and that the required U.S. government authorization was not obtained. According to the U.S. Department of Commerce, 3-G Mermet Corporation agreed to pay a $17,500 civil penalty.
Tennessee Company Settles Charges of Unauthorized Exports to Iran
BIS charged that Hixson, Tennessee , based Chattanooga Group, a division of Encore Medical Corporation, illegally exported its products to Iran through an Australian distributor in April 2000. The government charged that the company exported physical therapy equipment to Iran on three separate occasions, failing to file required shipper’s export declarations. Chattanooga Group agreed to pay a $101,000 fine to settle the charges.
Clients who are considering international ventures should contact counsel in order to verify that their proposed transaction(s) do not violate U.S. export regulations. Likewise, clients who have already embarked on international ventures should contact counsel to ensure that they have not inadvertently violated U.S. trade law. Voluntarily disclosing a violation may result in the waiver or reduction of penalties. Please contact attorneys Greg Mitchell firstname.lastname@example.org, 859.244.7548 and Jan de Beer email@example.com, 859.244.3247 in our International Services Group to discuss your business’ needs.