There are three primary set of export and sanctions rules. These are:
- · U.S. Export Administration Regulations (EAR)
- · International Traffic in Arms Regulations (ITAR)
- · Economic Sanctions Regulations
U.S. Export Administration Regulations
Export Administration Regulations (EAR) are found in 15 CFR Parts 730 to 744. These are administered under International Economic Emergency Powers Act by the Commerce Department’s Bureau of Industry and Security. EAR regulates exports including re-exports and deemed exports of commercial or dual-use goods, software and technology.
Penalties for non-compliance with EAR are quite severe. It can bring civil penalties of up to $250,000 per violation or twice the amount of the transaction whichever are greater and criminal penalties of up to $1 million per violation along with up to 20 years imprisonment. There are severe sanctions, in addition to the criminal and civil penalties that may be imposed for violations, including:
• termination of export privileges
• suspension and/or debarment from federal government contracting
• loss of federal funds
International Traffic in Arms Regulations
International Traffic in Arms Regulations (ITAR) are administered by the U.S. Department of State Directorate of Defense Trade Controls (DDTC) under the Arms Export Control Act. It regulates exports of items and services specifically designed for military applications. It controls the permanent and temporary export and temporary import of items on the United States Munitions List (USML). The items that are controlled include defense articles, defense services and technical data. Exports under ITAR include:
• Sending or taking a defense article out of the U.S.
• Disclosing or transferring in the U.S. any defense article to an embassy, agency or subdivision of a foreign government.
• Performing a defense service for a foreign person.
• Disclosing, releasing or transferring technical data or other information to a foreign person.
U.S. Economic Sanctions
Economic sanctions are administered by the U.S. Treasury Department Office of Foreign Assets Control (OFAC). These sanctions prohibit certain transactions with countries that are subject to boycotts, trade sanctions and embargoes. The sanctions can be either comprehensive or selective. It depends on the country and the scope of sanctions. OFAC currently enforces comprehensive economic embargoes against three countries – Cuba, Iran, and Sudan. It restricts any kind of business with these three countries if you are a U.S. person or a U.S. company. There are selective sanctions against Burma, North Korea and Syria. For Burma there are restrictions on financial activity and for North Korea and Syria, there are broad export controls. Most U.S. origin items are restricted for North Korea and Syria. In addition to country-based sanctions U.S. also has sanctions against Specially Designated Nationals (SDN).