The United States imposes a number of export controls and economic sanctions that restrict whether a
good, technology or service can be exported from the United States or reexported from another country
without a government license. These restrictions also affect whether companies can get paid for their
exports even if the export or reexport does not require a license. “Export controls” generally refer to
restrictions on exports due to the nature of the item, end-use or end-user involved while “economic
sanctions” generally refer to restrictions based on the country involved. This primer addresses the core
U.S. requirements in both areas that affect exporters and reexporters.
The reasons for requiring a license before certain transactions may proceed typically arise from
national security or foreign policy concerns. Also, the requirements affect diverse industries, such as
the automotive, chemical, electronics, marine, medical device, oil and gas and telecommunications
industries, as well as many others.
Several U.S. government agencies are involved in the implementation of export controls and economic
sanctions, most notably the Departments of Commerce, State and Treasury. The Department of
Energy and the Nuclear Regulatory Commission can also be involved. In addition, several countries
other than the United States have imposed their own export control and economic sanctions regimes.
The range of export and reexport-related activities at issue is also quite broad. Examples include
exports to customers, reexports by affiliates or distributors outside the United States, exports of non U.S made items containing U.S.-origin components, moving production equipment to an affiliate and
hiring foreign nationals.
This area of law is challenging for companies because it is very complex and is constantly evolving.
Substantial reform efforts underway now may ease some of the burden involved. The steep potential
penalties, however, require that companies take the time to understand their obligations and implement
appropriate compliance procedures. For most U.S. export control and economic sanctions laws, civil penalties can in clude fines of $250,000 or more per violation and a ban on exports. Enforcement cases regularly settle for hundreds of thousands of dollars.
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