U.S. companies and manufacturers who are planning to do business overseas with foreign governments, militaries, or law enforcement agencies can certainly enjoy very lucrative and mutually advantageous relationships with their clients, but they should be aware that the benefits of foreign trade come at a price. The export of many types of goods and services will introduce the U.S. vendor to a maze of laws, rules, and regulations that can be incredibly complicated, even impossible, to navigate. Too many companies just getting into the export business assume that their products are innocuous enough that they won’t be subject to stringent controls, but that can be a costly assumption, both in terms of money and industry reputation. Strict compliance with government regulations is essential to foreign export success.
FTR, EAR, and ITAR
The U.S. government regulates foreign trade in military and commercial under three basic systems of control and monitoring, as follows:
- FTR – Foreign Trade Regulations– These are administered under the jurisdiction of the U.S. Census Bureau’s Foreign Trade Division. The purpose of these regulations is to gather statistics on trade through the Automated Export System (AES) and provide that data to other regulatory agencies. They also set the definition of valuation, record-keeping requirements, and powers of attorney.
- EAR – Export Administration Regulations– These fall under the authority of the U.S. Bureau of Industry and Security (BIS). Their purpose is to control the export of dual-use goods, or commercial goods that can also be used for military or other undesired applications, or in countries that are embargoed, and all other products that aren’t addressed by other regulations. These can include technology and even certain business services.
- ITAR- International Traffic in Arms Regulations – Administered by the Directorate of Defense Trade Controls (DDTC) of the U.S. State Department, these enforce the restrictions on export of defense-related products as required by the Arms Export Control Act.
A Constantly Changing Situation
These regulations are just the beginning. There are many other regulatory agencies involved in the exportation of goods to foreign entities. In addition, the rules are constantly changing. In 2010, President Obama launched the Export Control Reform Initiative, a plan to comprehensively overhaul existing regulations that is still ongoing. It has experienced significant roadblocks and problems causing confusion and penalties for U.S. companies.
The Solution to Bureaucratic Complexity
International export regulations are a tangled web that’s always changing its pattern. Non-compliance can result in considerable fines and other penalties, as well as damage to corporate reputation that can lead to a significant loss of market share. The answer is to partner with export compliance professionals who already have many years of experience navigating the bureaucracy.
DXL makes the process simple by providing turnkey solutions, from licenses and initial agreements, to ongoing assessment and training. Defense Export Logistics can ensure that foreign business transactions run smoothly and trouble-free. Contact them today learn more.