Export Compliance

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Export Compliance

• Global California 2009
• April 3, 2009
• Santa Clara, CA

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EXPORT CONTROL BASICS

• Export Controls are based on item, destination,
  end-user and end-use.
• Export controls are designed to protect the
  national security, foreign policy and economic
  interests of the United States.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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PENALTIES

• Criminal 20 years imprisonment
• 250,000 fine (1,000,000 corporation)
• Civil 250,000 max per violation
• or 2 x value of export and potential
• Denial of export privileges
• Source Bureau of Industry and Security Office
  of Export Enforcement

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PENALTIES

• Avoid becoming an Enforcement Statistic. Make
  export compliance a priority!
• Requires top-down commitment from the CEO to the
  warehouse.
• Look for Changes to the BIS Regulations
• Example September 22, 2008, 115 new entries
  to the BIS Entities List creating a license
  requirement for the export of all items subject
  to the EAR.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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BASIC COMPLIANCE TOOLS

• Have an Export Management and Compliance Plan.
• Write clear operating guidelines, distribute to
  all personnel and provide training.
• Identify and publish all export control
  functions, responsible personnel, and their
  contact information.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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HOW TO DESIGN A COMPLIANCE PROGRAM

• Compliance program design there is no one size
  fits all
• Use Export Management System Guidelines
• Cited in 15 CFR sec 766 sup. 1
• Described in detail on the BIS Web Site
• Use Internal Compliance Plan Guidelines
• 15 CFR sec 752.11
• Industry Best Practices
• Source Bureau of Industry and Security Office
  of Export Enforcement

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PRINCIPLES OF AN EFFECTIVE COMPLAINCE PROGRAM

• 1. Whether the company has performed a
  meaningful risk analysis.
• 2. Existence of a formal written compliance
  program.
• 3. Appropriate senior officials responsible for
  compliance program.
• 4. Adequate training provided to employees.
• 5. Company effectively screens customers and
  transactions.
• 6. Company meets recordkeeping requirements.
• 7. Existence of internal system for reporting
  export violations.
• 8. Conducts and maintains results of export
  compliance audits.
• 9. Appropriate remedial activity taken in
  response to violations.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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EVIDENCE OF EFFECTIVE COMPLIANCE

• Documentation
• Training records
• Disciplinary records for violations of company
  policy
• Due diligence/screening checklist
• Evidence of record retention
• Provide results of compliance audits
• Clearly written designation of responsible
  personnel
• Source Bureau of Industry and Security Office
  of Export Enforcement

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WHAT THE EXPORTER MUST KNOW

• Correct product classification This is the
  exporters responsibility classify, verify, and
  document!
• Identify all parties to a transaction verify
  legitimate intermediaries and name ultimate
  consignee on export records.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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KNOW YOUR CUSTOMER GUIDANCE

• Be Aware of Diversion Risks!
• Lists you must check prior to export
• Denied Parties
• Embargoed countries
• BIS Listed Entities
• BIS General Orders
• Exercise due diligence where Red Flags are
  present refrain from/report questionable
  transactions.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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KNOW YOUR CUSTOMER GUIDANCE

• Research customers internet is a great place to
  start.
• Whenever practical talk to new customers about
  their markets and product applications.
• Learn to identify and recognize Red Flags.
• If there are Red Flags inquire.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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EXAMPLES OF DUAL USE ITEMS

• NUCLEAR WEAPONS
• Centrifuge
• High Speed Thermal Cameras
• Mass Spectrometer
• Vacuum Pumps
• BIOLOGICAL WEAPONS
• Bacterial Strains
• Coated Valves and Pumps
• Fermenters
• Presses
• Source Bureau of Industry and Security Office
  of Export Enforcement

• CHEMICAL WEAPONS
• Precursor chemicals
• Coolers/Heat Exchangers
• Mixing Vessels
• MISSILES
• Composites
• Machine Tools
• Filament Winding Equip
• Accelerometers
• Vibration Test Equipment

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HOW VIOLATIONS HAPPEN IN GOOD COMPANIES

• Overwhelmed by end of quarter orders and
  processing.
• New personnel using outdated go-by documentation.
• Export manager on vacation (cross train back up
  personnel).
• Lack of communication with sales staff and
  foreign distributors.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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INCOMPLETE/INCORRECT EEI INFORMATION

• Incorrect ECCN
• Improper use of NLR (No license required)
• Incorrect Ultimate Consignee
• If your forwarder completes your AES filing,
  ensure shipping instructions are clear and
  defined
• Source Bureau of Industry and Security Office
  of Export Enforcement

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FAILURE TO INFORM ON LICENSE CONDITIONS

• Identify all license conditions and identify any
  conflict with the sales transaction.
• Resolve any conflicts before proceeding with
  transaction. Even if this means amending the
  license!
• Notify intermediate and ultimate consignees of
  all BIS license conditions.
• Submit all reporting as required by BIS license.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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Summary

• If you identify a violation, immediately assess
  and contain problem, work with your management to
  evaluate the benefits of voluntary disclosure to
  BIS/OEE.
• Disclosures related to failure to obtain one-time
  review for use of the ENC exemption receive
  favorable treatment and are encouraged.
• Source Bureau of Industry and Security Office
  of Export Enforcement

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FedEx Global Trade Manager

• Your free, online shipping assistant

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Common Challenges International Shippers
Encounter  

• Missing, incorrect or improperly completed
  documents
• Complying with regulations and laws

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FedEx? Global Trade Manager Solutions

• With FedEx Global Trade Manager, you can
• Find the proper documents required for
  international shipping
• Prepare, store and reuse customs documents online
• View advisories concerning your shipment
• Research country profiles
• Search an up-to-date international
  denied-party-screening database
• Use product profiles to manage your commodity
  information

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Find International Documents

• This tool helps you determine and print the
  documents needed to accompany your international
  shipments, both express and ground, thereby
  helping to ensure a smooth customs clearance

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Find International Documents

• Enter your origin and destination countries
• Select whether youd like FedEx Global Trade
  Manager to help you find the particular documents
  you need for this shipment or to show you all the
  available documents pertinent to the import and
  export countries and shipment type you specified

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Find International Documents

• Enter the product information, including
• The name of the product
• The Harmonized System Code (you can search for
  this right on FedEx Global Trade Manager)
• The customs value
• The country of manufacture
• You have the option to save the product
  information in a product profile for fast and
  easy access at a later time

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Find International Documents

• View the list of recommended documents for your
  shipment, or a document list based on the import
  and export countries
• Some of the most frequently used documents are
  available for online completion, including the
  Commercial Invoice, the Pro Forma Invoice, the
  NAFTA Certificate of Origin, the Certificate of
  Origin and the packing list

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Document Preparation Center

• Prepare, store and manage customs documents
  online. Save time avoiding duplicate entry of
  information when you save document profiles and
  reuse documents for future shipments.

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Document Preparation Center

• To begin, select one or more documents from to
  complete them online, and either print or click
  Ship to prepare your shipment.
• Save document profiles for international
  shipments to edit and reuse a set of documents
  when you repeat similar shipments. Also initiate
  a similar shipment with your document profiles.
• Each document profile relates to an international
  shipment you have already prepared. You can
  easily search and sort to access your profiles
  efficiently. You can also customize your view.

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Document Preparation Center

• Save partially completed documents to come back
  and finish at a more convenient time.
• Select a pending document profile to resume
  preparation and complete or to delete as needed.

• Prepared customs documents are
  stored in the Document
  Archive for complete visibility.
• View and modify each document or create a
  document profile to reuse the document for future
  shipments.
• Upload your company lettered to be used with your
  Commercial invoice and also upload a signature
  image for customized and professional documents.

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Document Preparation Center

• All prepared customs documents are stored in the
  Document Archive for complete visibility.
• View and modify each document or create a
  document profile to reuse the document for future
  shipments.
• Upload your company lettered to be used with your
  Commercial invoices and also upload a signature
  image for customized and professional documents.

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Advisories

• This feature gives you important regulatory
  information for the import and export side of
  your transaction, as well as for the commodity
  you are shipping

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Advisories

• Enter your origin and destination countries,
  transaction currency, and shipping and insurance
  charges
• Enter the product information, including
• The name of the product
• The Harmonized System Code (you can search for
  this right on FedEx Global Trade Manager)
• The customs value
• The country of manufacture
• You have the option to save the product
  information in a product profile for fast and
  easy access at a later time
• FedEx Global Trade Manager prepares a report
  containing the applicable shipping advisories
  that you need to know about

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Country Profiles

• Provides an overview of essential,
  country-specific shipping information and
  regulatory requirements, including demographics,
  business information and statistics
• This resource enables you to research a country
  upfront for sourcing decisions before you ship

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Denied Party Screening

• Identifies individuals, companies and other
  parties that have been denied the privilege of
  engaging in international business transactions

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International Resource Center

• Here youll find several useful tools and
  resources designed to make international
  shipping accessible and straightforward,
  including
• International shipping checklist
• International shipping reference guide
• Global trade links
• FedEx international shipping resources

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FedEx? Global Trade Manager

• FedEx Global Trade Manager is just one more way
  FedEx can help simplify your shipping, saving you
  time and money and boosting your productivity
• Log in today at https//gtm.fedex.com/GTM to see
  how easy it is!

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Thank You