1 Regulation of Exports Chapter 15 © 2005 Thomson/West Legal Studies In Business

2 Why Control Exports? Not sell goods and technology to countries that might affect national security But after the “cold war” ended, who is the enemy?

3 Multilateral vs. Unilateral Controls? Unilateral: U.S. has its laws to control exports just as many other countries do Multilateral: COCOM disbanded, now Wassenaar Arrangement (1996) which is much looser All countries do not agree on control necessary

4 U.S. Controls U.S. law expired but extended by executive order under the authority of IEEPA. Both Clinton and Bush had to use this method Congress can not agree on new law Export Administration Act USA Patriot Act

5 Times Publishing v. United States The NYT sought the release of information under the FOIA about export licenses to Cuba under the EAA. The District Court agreed saying that the lapse in the EAA rendered the confidentiality provisions void. The Court of Appeals reversed the District Court and held that the confidentiality provisions did not lapse and was maintained by the extension of the provisions via Executive Order.

6 Export Controls On: Exports commodities and technical data Re-exports commodities and technical data Exports and re-exports from foreign country a product with U.S. parts Exports and re-exports products from foreign country products based on U.S. technical data

7 U.S. Controls Why did the U.S. law expire? Why did the president have to extend by Executive Order? Problem with Congress and inability to agree Partisanship

8 Reasons for Control ATAntiterrorism CBChemical and Biological weapons CCCrime Control CWChemical Weapons Convention EIEncryption Items FCFirearms Convention MTMissile Technology NSNational Security

9 Reasons for Control NPNuclear Nonproliferation RSRegional Stability SSShort Supply XPComputers SISignificant Items

10 Antiboycott Law Illegal to comply with boycott imposed by a foreign country against a country that is friendly to the U.S. Briggs and Stratton v. Baldridge: U.S. company thought by saying it had no business with Israel, it would not be violating the law. The court found the company had violated the law.

11 Case Israel Aircraft v. Sanwa Business

12 Effectiveness of Export Law? How effective are controls if another company from another country will sell the product?

13 Mechanics What item? Going where? Who will use? For what purpose?

14 Mechanics of Export Control License Foreign availability Diversion - illegal placement of goods in hands of individual who would not be granted a license Deemed Export? Necessity of export management system

15 Penalties TDO: table of denial orders U.S. v. Elkins, $6,600,000 fine and 10 year sentence upheld for illegal export of planes

16 Business Implications Appoint knowledgeable person to handle export compliance Be aware of warning signs of illegal activity Work for export law change if your company is adversely affected by export restrictions Role of business in affecting trade law?