Urban myths, smart goldfish, and US export controls

No matter where you’re based, US export control regulations are something you need to take into consideration. US law follows the goods so to speak, and therefore a company does not need to be located in the US to be subject to US export controls. The US government claims worldwide application of US export control laws (extraterritoriality) and seeks to penalize those who breach them, regardless of location.

Export controls are not just about military goods. Although the aerospace and defense sector is undoubtedly a key focus area, controls are also in place for items, information, and software that are considered to be “dual-use” as they are primarily commercial or civil in nature, but also have potential military applications. Dual-use items may come from a wide variety of different industry sectors including telecommunications, electronics, chemicals, and computing and are categorized in the US in the Commerce Control List (CCL).

The United States, in common with many other countries around the world, not only regulates the movement of controlled physical goods, but also the transfer of sensitive “technology” and software not in the public domain. The US government’s definition of “technology” is wide-ranging and can include instructions (written or recorded), blueprints, technical specifications, formulae, design drawings, models, operational manuals, and parts catalogues. In all likelihood, if the physical item itself requires a license, then the export of any corresponding software or technology is also likely to require a license, even if exported independently of the physical item.

The requirement to comply with US re-export controls is in addition to and separate from any national export controls legislation and licensing. A company could, for example, legally ship US controlled goods from the EU only using a valid national/EU license. From a US government perspective however, US re-export controls laws may have been violated given the extraterritorial reach of their regulations. Therefore companies need to ensure they have both national and US authorizations in place before shipping US controlled materials.

It is true that a non-US entity cannot apply for a US export license and would need an authorized US entity or broker to make the license application. An export license typically applies to the export of an article from the US, but consideration needs to be made of how subsequent re-exports outside the US are managed. These also need to be covered by a US license – either under the terms of the original license, or a new authorization (for example a general license or an exemption/exception).