Controlled Import / Export

U.S. Export Laws explained:
U.S. export control laws are complex, when talking about ITAR and EAR. Businesses often struggle to figure out what parts of the law apply to them. Since it is so complicated GCA is here to help. Below are the steps in understanding the process:

  1. Type of Controlled Goods: is your product/service involved in transferring data or physical products?
  2. Final use: who is it destined for and for what use?
  3. ITAR or EAR: does your product/services fall under ITAR or EAR regulations.
  4. Type of Export: is your company exporting, re-exporting, or shipping domestically?
  5. Obtaining the License: having the documents needed for obtaining the license.

GCA can assist with obtaining the license if your company is having a hard time in understanding the requirements or the application process. Sometimes companies receive a "Return Without Action" (RWA) on their license application, GCA can explain the reasons for the RWA. GCA can also be the liaison with foreign partners. GCA will be happy to assist in identifying any export restrictions and saving you time and effort by guiding you through the process.

Directorate of Defense Trade Controls (DDTC)
GCA can assist in the Directorate of Defense Trade Controls (DDTC) registration process and navigating the International Traffic in Arms Regulations (ITAR) especially to the companies who are involved in manufacturing, exporting, or brokering defense articles, services, and technical data. GCA will help companies understand the DDTC registration and its importance when considering engaging with ITAR-controlled items. GCA has experience in helping distributors, importers, software/hardware vendors, third-party suppliers, government contractors, and wholesalers.

The costs for Registration are $2,250 per year for new registrants and for companies submitting fewer than ten licenses annually. Companies with more than ten licenses the fee is variable. Once a company is registered it means it is compliant with Part 122 of ITAR and allows the company to apply for export licenses or exemptions. If registration lapses, you cannot import or export until it's reinstated.

Restricted Party Screening in Trade Compliance
GCA will assist companies through the Restricted Party Screening (RPS) and identifying individuals or entities who are on the government denied party lists. Below is a list of some of the reasons individuals or organizations are prohibited:

  • Terrorist affiliations
  • Corrupt business practices
  • Threats to national security
  • Previous dealings with denied parties

GCA will assist in making sure companies are not dealing with anyone on the restricted party lists. If this occurs companies can lose export privileges, be subject to severe fines, and ultimately have business disruptions. By having GCA help with your company it will avoid costly fines, save time and money, prevent delays and disruptions, helping national security.

Trade:
GCA understands trade is often confusing and constantly having new regulations being added. GCA is available to help companies navigate these regulations. GCA will look for ways to save the company time and money. GCA can help companies understand International Traffic in Arms Regulations (ITAR): Licensing, exemptions, product classification, and agreements, Export Administration Regulations (EAR): Licensing, exceptions, product classification, and export controls, Export Compliance: Licensing, product classification, and sanctions review, Import Compliance: Customs protests, tariff classification, trade agreements. If your company exports or imports goods, services, or data, you likely need to comply with ITAR or EAR regulations. Many businesses, regardless of size or industry, require help understanding and maintaining compliance with these rules.

GCA can help with companies who want to know more about ITAR or EAR regulations, getting contacted by government agencies like Commerce or HSI, and CBP constantly seizing shipments.

OFAC Screening
Restricted parties screening is complex, with the addition of the regulations set by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). GCA will advise companies who are on the OFAC Screening list. GCA will look for:

  • Specially Designated Nationals (SDN) List
  • Persons Identified as Blocked (PIB) Solely Pursuant to EO 13599 (Treasury Dept. vessels)
  • Foreign Sanctions Evaders List
  • Sectoral Sanctions Identification (SSI) List
  • Palestinian Legislative Council (PLC) List
  • List of Foreign Financial Institutions Subject to Part 561

OFAC sanctions can be specific to individuals and entities or be can be broad like countries, it can be directed to specific criminal or administrative violations due to financial transactions and asset flows.

Export Management and Compliance Programs
GCA understands that each country and region in the world is culturally different and require approaches so that’s why GCA is managed by those people. Different customs, cultures, currencies, and foreign policies make it difficult so GCA is there to help.

Export Compliance Program
An Export Compliance Program (ECP) is a structured system designed to manage export-related decisions and transactions. It ensures compliance with Export Administration Regulations (EAR), identifies potential risks, and helps avoid violations. An effective ECP helps you choose compliant partners and manage export activities properly.

GCA is structured to advise companies from unintentional errors can lead to severe consequences, such as expensive fines, loss of export licenses and privileges, legal repercussions, including jail time, time-consuming corrective actions, and placement on restricted parties’ lists.

Voluntary Disclosure
If a company feels that they have done something wrong, the National Security Division (NSD) of the U.S. Department of Justice (DOJ) offers a formal program for companies to report past trade compliance violations, whether intentional or accidental. GCA can discover past violations and assist in voluntary disclosures to the government so mitigation of potential fines and penalties can occur, and show your company is committed to doing what’s right. By doing this companies may have a reduced penalty, potential non-prosecution agreements, shorter supervised compliance periods, and lower fines and other monetary penalties. GCA can help by explaining the compliance issues so companies can find the mitigating factors and develop and implement corrective actions. GCA can also help in companies get in touch with government officials so they can to resolve your case. If ITAR or EAR applies to your company GCA can consult directly with the U.S. Government and get the answers you may need. GCA can assist in a Commodity Jurisdiction (CJ) request which asks for an official evaluation of your product or service to see if it falls under ITAR regulations. GCA can help if your product or service is new, you have cutting-edge technology, you're unsure if older legacy products still fall under ITAR and your military-inspired items now have broader commercial uses. GCA can provide CJ request effectively by providing detailed specifications of the product or service, explain its commercial and military applications, and describe its development history.

Export Compliance Assessment
An export compliance assessment is essential for ensuring adherence to export regulations and protecting your company from potential penalties. GCA will assess your company’s strengths and weaknesses in its compliance programs.

Once GCA understands your company’s situation, GCA will begin gathering information to evaluate its level of export compliance. The quality of the data collected is crucial. Without complete information, it becomes challenging to identify compliance gaps or areas of non-compliance. GCA will gather information through documentation and interviews. These interviews not only help us understand your company but also serve as an opportunity for education and relationship-building. GCA’s aim to make every client a long-term partner. GCA takes the time to explain the purpose behind our questions and develop a deep understanding of your company’s internal dynamics. This allows us to create a detailed picture of your operations and position your business for future trade compliance.

While interviews provide the narrative, documentation reveals the details. Before interviews, GCA will request specific data, such as export compliance manuals, procedures, shipping documentation, and export logs over a defined period. Even if a company is just starting out and lacks documentation, that’s okay! GCA can guide you in setting up necessary processes and documentation to build a compliance program from scratch.

With years of experience conducting export compliance assessments, GCA knows how to ask the right questions and gather the right information efficiently. Once GCA reviews the data, GCA categorizes it and identifies where any compliance gaps exist. GCA’s goal is to help your company exceed basic regulatory expectations while keeping our recommendations practical and feasible.

GCA will provide a thorough overview, highlighting areas of non-compliance, risk factors, gaps, vulnerabilities, and best practices. GCA offers actionable advice to close these gaps and enhance compliance in each functional area. Every solution is customized, as we understand each company is unique. GCA’s consultants are experts in export regulations and can swiftly identify issues and provide effective solutions.

Office of Foreign Assets Control
The Office of Foreign Assets Control (OFAC) is a branch of the U.S. Department of Treasury responsible for enforcing economic sanctions and combating money laundering. It maintains a sanctions list of blocked persons and countries, and its regulations aim to support U.S. foreign policy and national security objectives. OFAC’s jurisdiction extends to all U.S. persons and citizens, as well as foreign entities. The agency operates under various laws, including the Trading with The Enemy Act and the International

Emergency Economic Powers Act.
OFAC compliance is crucial for businesses to avoid significant penalties, which can reach up to $1 million for corporations per violation and $250,000 or 20 years in prison for individuals. Non-compliance can also lead to negative publicity and loss of international business. Companies engaged in international trade must implement robust compliance programs to adhere to OFAC’s complex sanctions and embargoes.

Import Compliance
Adhering to U.S. government regulations for importing goods include:

  1. Valuation: Report the price and all associated costs for imported goods.
  2. Classification: Define imported items using the Harmonized Tariff Schedule (HTS) and assign an HTS code to determine duties and trade statistics.
  3. Country of Origin: Accurately list the country of origin, as it affects duty rates and compliance.
  4. Quantity: Report the number of items and follow HTS guidelines for measurement units.

Compliance is ongoing and requires vigilance. Importers must avoid penalties by maintaining accurate records and adhering to regulations. Non-compliance can lead to severe penalties, including fines for negligence, gross negligence, or fraud.

Common mistakes include underestimating the time and cost of compliance, assuming Customs won't target their business, or over-relying on brokers. Proper import compliance programs can help streamline processes and avoid costly fines. GCA offers consulting to ensure businesses meet compliance requirements and avoid penalties.

Businesses engaged in importing need professional import consulting services to ensure smooth customs clearance and regulatory compliance. Mistakes in documentation or record-keeping can lead to delays and costly fines. Import compliance is complex, requiring hands-on experience with government agencies and industry-specific knowledge. GCA can assist companies through the following projects:

  • Import compliance training to keep employees up-to-date with changing regulations.
  • Import audits to identify potential compliance issues before fines occur.
  • HTS compliance for correct product classification and tariffs.
  • Free Trade Agreement guidance for cost savings.
  • Duty protests to reclaim funds through duty drawbacks.

GCA will help your company navigate regulations, maintain compliance, and streamline operations, allowing it to focus on other priorities while avoiding penalties. A comprehensive import compliance program is essential for any business involved in international trade.

Harmonized Tariff Schedule
The HTS (Harmonized Tariff Schedule) is a classification number that is used by U.S. Customs to determine tariffs on imported goods. With over 17,000 possible codes, finding the correct one can be challenging. The HTS code is crucial as it determines the duty rate, identifies regulations, streamlines Customs procedures, and helps collect trade statistics. It also identifies if a product qualifies for duty exemptions under trade agreements or specific laws. Accurate classification is essential since mistakes can lead to audits and potential penalties, even after goods have been cleared. Working with a trade consultant can help ensure correct HTS classifications.

Maximizing FTA Benefits
Free Trade Agreements (FTAs) can significantly reduce your company's costs by easing access to international markets. FTAs, like the USMCA (formerly NAFTA), KORUS (South Korea), CTPA (Colombia), and others with countries such as Australia, Chile, and Panama, lower trade barriers and make exporting more affordable for U.S. businesses. Navigating these agreements can be complex, but GCA can help your company understand and comply with FTA requirements, ensuring you maximize savings and maintain compliance.

Customs Protests
The U.S. Customs and Border Protection (CBP), part of the Department of Homeland Security, ensures the safety of trade and imports. Non-compliance with customs laws can be costly for importers, but pursuing customs protests can potentially save money.

A customs protest is a formal objection to CBP's decisions, such as the classification of imported items. By filing a protest, importers can request a review of their cases. If CBP agrees with the protest, importers might receive refunds for overpaid duties plus interest.

In order to potentially obtain a custom, protest a company must follow the following guidelines:

  • Protests must be filed within 180 days of liquidation using CBP Form 19.
  • They require a thorough review of the Harmonized Tariff Schedule (HTS) and Customs Regulations (19 CFR).
  • Protests can be filed electronically through the ACE Protest module or by paper at CBP ports.

International Traffic in Arms Regulations

The International Traffic in Arms Regulations (ITAR) is a set of regulations that the U.S. government uses to oversee exports and re-exports of defense services, technical data, and specific goods.

The Directorate of Defense Trade Controls (DDTC) is responsible for ITAR compliance. It regulates the export of defense articles and related technical data on the United States Munitions List (USML).

Defense-related articles are outlined on the USML through the Arms Export Control Act (AECA). There are 21 categories of Defense Articles covered under the USML, including:

  1. Firearms, Close Assault Weapons, and Combat Shotguns
  2. Guns and Armament
  3. Ammunition/Ordnance
  4. Launch Vehicles, Guided Missiles, Ballistic Missiles, Rockets, Torpedoes, Bombs, and Mines
  5. Explosives and Energetic Materials, Propellants, Incendiary Agents and Their Constituents
  6. Surface Vessels of War and Special Naval Equipment
  7. Ground Vehicles
  8. Aircraft and Related Articles
  9. Military Training Equipment and Training
  10. Personal Protective Equipment
  11. Military Electronics
  12. Fire Control, Laser, Imaging and Guidance Equipment
  13. Materials and Miscellaneous Articles
  14. Toxicological Agents, Including Chemical Agents, Biological Agents, and Associated Equipment
  15. Spacecraft and Related Articles
  16. Nuclear Weapons Related Articles
  17. Classified Articles, Technical Data, and Defense Services Not Otherwise Enumerated
  18. Directed Energy Weapons
  19. Gas Turbine Engines and Associated Equipment
  20. Submersible Vessels and Related Articles
  21. Articles, Technical Data, and Defense Services.

ITAR Registration and Compliance
To register under the International Traffic in Arms Regulations (ITAR), companies must go through the State Department's Directorate of Defense Trade Controls (DDTC). The registration process can be complex, involving questions about exemptions, end-users, and specifications. Here’s a summary of the key agencies involved:

  • DDTC: Oversees and enforces ITAR regulations.
  • Bureau of Industry and Security (BIS): Manages related Export Administration Regulations (EAR) under the Department of Commerce.
  • Department of Defense (DOD): Conducts critical reviews and approvals.
  • Department of Homeland Security (DHS): Enforces physical aspects of ITAR compliance, with Customs and Border Protection (CBP) inspecting exports and imports.

ITAR regulates the export of defense-related products, services, and technology, making compliance essential. Violations can lead to severe consequences such as fines up to $1 million per company violation, personal civil penalties up to $500,000 per violation, criminal charges for individuals knowingly violating the rules, and loss of export licenses and potential disruptions to operations.

GCA can help companies navigate the intricacies of ITAR, ensuring compliance and preventing fines, penalties, and operational setbacks.

ITAR Regulations
ITAR has been in place since the 1970s and requires companies involved in defense-related activities to comply with strict regulations, including those covering technical data and services listed under the U.S. Munitions List (USML).

To be ITAR compliant, businesses must first register with the State Department’s Directorate of Defense Trade Controls (DDTC) and follow all outlined requirements. Many industries require their supply chains to be ITAR compliant to ensure secure handling of defense-related items.

GCA can help navigate these complex regulations, avoid violations, and focus on growth.

ITAR Compliance
ITAR controls the export and import of defense-related technologies, services, and items listed on the U.S. Munitions List (USML). ITAR compliance is crucial to prevent sensitive defense information from reaching those who could harm U.S. national security.

Many businesses mistakenly believe ITAR only applies to military hardware like tanks and missiles, but it also governs a broader range of products, services, and technical data. Any company involved with defense-related products or working with sensitive data connected to the USML must adhere to ITAR regulations.

Companies working with the U.S. military or handling defense-related products and sensitive technical data are required to be ITAR compliant. ITAR rules extend beyond traditional defense articles to include a variety of products and services covered under the USML.

Navigating ITAR can seem overwhelming, but with GCA’s guidance, your business can achieve compliance. GCA can provide clear, actionable steps to help you develop a compliance program, allowing your company to focus on business growth while staying aligned with ITAR requirements.

GCA understands that many companies struggle with ITAR compliance due to its complexity. GCA will help companies become compliant by advising them of the steps. Those steps are:

  1. Register with DDTC: Officially register your company with the Directorate of Defense Trade Controls.
  2. Fulfill Regulatory Requirements: Meet all obligations outlined in ITAR regulations.
  3. Implement a Compliance Program: Develop a comprehensive program to manage compliance.
  4. Train Employees: Educate your staff on ITAR rules and procedures.
  5. Maintain Ongoing Compliance: Consistently follow and update your compliance program daily.

Ensuring compliance involves multiple layers, including proper registration, adherence to regulations, and continuous employee training. GCA will help companies register with DDTC. True ITAR compliance requires comprehensive measures beyond submitting forms and paying fees. GCA can help safeguard your business against violations and allow you to focus on your core operations.

Consequences of ITAR Violations
Compliance with the International Traffic in Arms Regulations (ITAR) is essential for any business dealing with defense-related products, technical data, or services. The U.S. Government enforces ITAR regulations strictly, and violations can result in severe penalties.

ITAR violations can occur not only with physical goods but also with the mishandling of technical data or services related to defense. Penalties vary based on the type and severity of the violation, but all carry significant repercussions. The following are penalties for ITAR Violations:

  • Business Fines: Companies can face fines up to $1 million per violation, which can severely impact their ability to compete.
  • Personal Civil Penalties: Individuals can be fined up to $500,000 per violation, at the discretion of the Secretary of State.
  • Personal Criminal Penalties: Individuals knowingly violating ITAR can face criminal charges, including imprisonment.
  • Loss of Export Licenses: Violating ITAR may lead to debarment, preventing a company from exporting goods or working as a government contractor.
  • Business Disruption: Sanctions, shipment delays, and damage to a company’s reputation can lead to long-term operational and financial impacts.