Export Controls: Denied Parties
With concerns about the unauthorized and/or inappropriate transfer of technology, products, and information to individuals or entities within or beyond US borders, the US Government established laws and regulations, known as export controls, to restrict such transfer. The government regulates the export of sensitive information, physical equipment, and software and technology to promote foreign policy objectives and promote national security. Under US law, specific individuals, organizations, and countries deemed a risk or danger to US interests are subject to various trade sanctions, restrictions, and embargoes. Through export controls, all US citizens and companies are required to avoid conducting any transactions with these entities.
What are US Export Controls?
US export controls are rules and regulations that are imposed by government authorities/agencies to restrict and prohibit the transfer or release of critical information, technology, physical equipment, or service to foreign entities or individuals within or beyond the borders of the United States. Export control laws and regulations apply to virtually every field ranging from science to engineering. Through the export controls, the US Government:
- Enhances national security by limiting access to sensitive and critical US weapons and technology
- Fosters regional stability
- Promotes foreign policy by adhering to international commitments
How Many Types of Export Controls Exist?
While the export controls have been present in the US since the 1940s, it was only some decades later that they became more stringent due to concerns about homeland security, terrorism, the proliferation of deadly weapons, leaks of US technology to foreign competitors, and drug trafficking. Generally, export laws and regulations cover four main activities:
- Transfer of controlled information to foreign individuals or entities. This includes things such as technical data.
- Shipment of physical items to a foreign country. These include things such as scientific equipment and software.
- Verbal, electronic, written, or visual disclosures of controlled technical or scientific information that relates to export-controlled items to foreigners, whether within or beyond US borders.
- Visiting sanctioned or embargoed countries to lecture or conduct research.
As per export control regulations, certain goods and technologies may be restricted or may require a license for you to proceed with the export.
What is a Denied Party List?
A denied party or restricted party list is basically a list of individuals and companies that is compiled or created by government agencies or authorities warning local entities or citizens from conducting business or interacting with them since they pose a risk. The list highlights the entities or persons that various US agencies have flagged as unsafe to transact or do business with.
An individual or company may be added to the denied party list due to various reasons. These include things like affiliation with terrorist organizations, a history of corrupt practices, or failure to respect human rights. The denied party lists in the US are usually published by the Department of State, Department of Commerce, and Department of Treasury.
All individuals, organizations, and companies in the US need to comply with the export control regulations by ensuring that the entities they are dealing with are not on the denied party list. This can be done through restricted party screening, which involves checking a prospective customer or business party against the denied party lists.
Classifying Your Item and Determining If You Need a License
If you want to determine whether your export needs authorization from the Bureau of Industry and Security ( a department in the Commerce Department), there are four things you need to know:
- The ECCN of the item
- Its final destination
- Its intended end user
- The end use of the product
Determining the Export Control Classification Number (ECCN) can be done in three ways:
- Self-classification. This requires that you possess a vast understanding of the item at hand and the structure of the Commerce Control List.
- Ask for an official classification from BIS. This is done online via the Simplified Network Application Process – Redesign (SNAP-R).
- Contact the product vendor for classification. You can ask the manufacturer if they have classified the product
If you determine that your item doesn’t fit the parameters or have its own ECCN and export controls from other agencies, it can be exported utilizing the license exception NLR (no license is required). However, it must meet the following conditions:
- You should ensure that it is not being shipped to a sanctioned country
- That it is not being transferred to an individual, organization or company in the denied party list, or a prohibited end-user
- That it will not be utilized for a particular end-use that is subject to higher controls
Ensuring that your item is classified accordingly not only helps you protect the US against external threats but also yourself against hefty fines, penalties, or even jail time.
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