U'S' Commercial Service

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U.S. Commercial Service

• Denver Software Club Presentation
• by
• Suzette Nickle
• Senior International Trade Specialist
• Denver US Export Assistance Center
• April 22, 2008

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U.S. Commercial Service
The U.S. Commercial Service is a program of the
U.S. Department of Commerces International Trade
Administration.

• Our mission
• To promote the export of goods services from
  the United States, particularly by small- and
  medium-sized businesses
• To represent U.S. business interests
  internationally
• To help U.S. businesses find qualified
  international partners

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Our Network What it can do for you

• Trade specialists in 108 U.S. cities and more
  than 150 posts in 80 countries worldwide...

We can...

• Locate international buyers, distributors
  agents
• Provide expert help at every stage of the
  export process
• Help you to enter new markets faster and more
  profitably

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Products Services

• Commercial News USA
• Catalog Exhibitions

• Market Research
• Gold Key Matching Service
• Trade Counseling Advocacy
• International Partner Search
• China Business Information Center
• Middle East and North Africa Business Information
  Center

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Estimates of 2008 Global IT Spending
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Global IT Spending, 2007-2011
CAGR 2007-2011
Source IDC, 02/08
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Global Packaged Software MarketBy Type
Source IDC 02/08
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Top 10 Foreign Packaged Software Markets in 2011
Source IDC 02/08
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Top 10 Foreign Packaged Software Markets
2007-2011 Growth
CAGR
Source IDC 02/08
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Global IT Services MarketBy Type
Source IDC 02/08
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Top 10 Foreign IT Services Markets in 2011
Source IDC 02/08
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Top 10 Foreign IT Services Markets 2007-2011
Growth
CAGR
Source IDC 02/08
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Estimates of 2008 U.S. IT Spending
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U.S. IT Spending, 2007-2011
CAGR 2007-2011
Source IDC 02/08
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ICT Trends - Asia

• ICT Market Trends
•  New telecom services are driving new investments
  in the Asian market
• Convergence of services require more high-tech
• Application Core technologies are always in
  high demand
• More companies want to go global partnering with
  U.S. firms
• Standards are key to the market access

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Best Prospects - Asia

•  Best Prospects Software
• Security
• Financial
• Manufacturing
• SCM/ ERP/ CRM
• Packaged software
• Wireless Telecom Internet Broadband Sector
• VoIP products and services
• 3G/ 3.5G Equipment and Contents
• WiMax equipment/ solutions/ components
• Broadband Convergence Network
• Internet Protocol TV Technology
• Mobile Broadcasting Technology
• Triple Play (Data/ Voice/ Video)
• Home Networking/ Consumer Electronics Equipment/
  Components/ Solutions
• Radio Frequency Identification (RFID) technology
•  

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Mexico Best Prospects

• Broadband
• Essential element there has to be value
• Multiple competitors Fixed mobile operators,
  CATV, independent ISPs, Mobile WiMAX, satellite
• Must have significant cost/price reduction
  Interconnection
• Software Development IT Services
• Great opportunity for Mexican industry
• Increasing presence of Indian companies in Mexico
  to serve US clients
• There are different private and public efforts to
  support the industry Ministry of Economy with
  diverse programs Enciclomedia, e-Mexico, Digital
  Economy, Expo PyMEs (SMEs). Privately the Mexico
  IT Program is sponsored by CANIETI.
• Main applications
• VoIP Strong deployments by Axtel and CATV
  companies
• IPTV Telmex/ATT/Microsoft

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Mexico - continued

• 2nd largest market in Latin America (22) for
  video recorders, TV sets, and PCs
• Consumer credit widely available with attractive
  terms
• Multiple banks have surged.
• Retail chains in the forefront Wal-Mart
• Video game industry
• US500 million. 1 market
• 1 - 2 of the US market
• 5 - 7 for Microsoft
• Sales about 1 million consoles
• Trade show Electronic Games Show Mexico. August
  2008. Supported by the Ministry of Economy
• Main manufactures Sony, Microsoft and Nintendo.
  Mexico is the platform for Latin American
  distribution - Main console is Xbox
• Mexico and Brazil have 65 of the regions GDP
  and strong credit structures with over 50 of the
  market followed by Play Station

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Europe

EUR billion Total ICT 659 Computer Hardware
84 End-user Telcom Eq. 30 Office Equipment
9 Datacom Network 43 Total ICT Eq.
166 Software 71 IT Services 132 Carrier
Services 291  
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ICT Best Prospects - Europe

• Best prospects
• Security solutions, streaming media, digital
  identity services, blade servers, wireless
  solutions databases, security software, software
  and IT services, IT and network security,
  knowledge management and web services

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What is an Export?

• Sending or taking products or data out of US
• Disclosing Technical Data (including orally or
  visually) to a non-US person, in the US or
  abroad
• Re-exporting US products or data from one country
  to another or to a third party in a foreign
  (non-US) country.

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What is a Deemed Export?

• The Export Administration Regulations (EAR)
  define a deemed export as the release of
  technology or source code subject to the EAR to a
  foreign national in the United States. Such
  release is deemed to be an export to the home
  country of the foreign national.
• Facility Tours Foreign Student Interns Faxed
  Designs/Drawings Technical Data in Email
  Water Cooler Conversations w Foreign Visitor

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How do Exports Occur?

• Tangible Shipments
• Hand-carrying products
• Electronic transmission (Fax, modem, E-mail)
• Publishing articles
• Oral Conversations
• Foreign (non-US) visitors (meetings, plant tours)
• Trade shows (US and Foreign)
• Offshore procurement/sourcing (build to print)
• Re-export of US goods and data
• US Laws apply to both tangible and intangible
  exports!!!

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When do U.S. Export Controls Apply?

• All exports!!!
• EVERY export from the U.S. requires some form of
  export authorization (License or Exemption)
• There are many different types of licenses and
  exemptions available
• Type of license or exemption available depends on
  several factors.

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Who Regulates Exports?

• SEVERAL U.S. Government Agencies, including
• US Department of State US Congress
• US Department of Commerce White House
• US Department of Defense Joint Staff
• Defense Security Cooperation Agency Military
  Services
• Department of Homeland Security Missile
  Defense Agency
• Bureau of Alcohol Tobacco and Firearms US
  Customs
• Department of Agriculture National Security
  Council
• Department of Energy US Trade
  Representative
• Department of Justice Intelligence
  Community
• Nuclear Regulatory Commission NASA

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Primary Agencies for Regulating Exports

• US Department of Commerce
• Bureau of Industry and Security (BIS)
• Export Administration Regulations EAR
• Commerce Control List - CCL
• US Department of State
• Directorate of Defense Trade Controls (DDTC)
• International Traffic in Arms Regulations - ITAR
• US Munitions List - USML

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Why Should a Company Care?

• Fines Penalties for Export Violations

• FY 2006 BIS Investigations Resulted in
• 33 Criminal Convictions
• Monetary Fines of 3 Million
• Admin Fines Totaling 13 Million
• 33 Export Denial Orders
• Dont Let This Happen to You

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How to Determine if an Export License is Required

• Question 1 What are you Exporting?
• Question 2 Where are you Exporting?
• Question 3 To Whom are you Exporting?
• Question 4 What is your Items End Use?

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1. What are you Exporting?

• Determine the Products Export Commodity
  Classification Number (ECCN)
• Option 1 Self Determination
• Use the Export Administration Regulations (EAR)
• Same-Day Answer
• Option 2 Official Determination
• Submit Request to the Bureau of Industry
  Security
• Can Take 6-8 Weeks for Response

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What are you Exporting?

• ECCN Allows you to Determine why the Product
  Requires a License
• Take Note of why License is Required
• NP Nuclear Proliferation
• AT Anti-Terrorism
• Other

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2. Where Are You Exporting?

• Determine Whether your Product Requires a License
  for the Destination
• Compare Reason for a License to the Country
  Commercial Chart
• If an X Appears in Countrys Column for your
  Product, then License is Required

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Where Are You Exporting?
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3. To Whom Are You Exporting?

• Certain individuals and organizations are
  prohibited from receiving U.S. exports, and
  others may only receive goods if they have been
  licensed.
• See Lists to Check on BIS Website
• Entity List
• Specially Designated Nationals
• Denied Persons
• Unverified

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4. What is the End Use?

• Some end-uses are prohibited while others may
  require a license.
• EXAMPLE You may not export to certain entities
  involved in the proliferation of weapons of mass
  destruction (e.g., nuclear, biological, chemical)
  and the missiles to deliver them, without
  specific authorization, no matter what your item
  is.

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Encryption

• ALL encryption requires a one time review by
  BIS
• YOU CANNOT SELF CERTIFY/CLASSIFY ENCRYPTION
  ITEMS.
• After one time review, for most cases, ENC
  eligible - Ship to everywhere other than
  terrorist countries
• License required for CISCO high end routers
  Government end-users/not consumers
• SOURCE CODE to foreign developers will need a
  license.
• Technology Developments will need a license.
• Twice a year must report of units and country
  sent to BIS NSA
• http//www.bis.doc.gov/encryption

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Checklist of Encryption

• 1. Does your product perform "cryptography", or
  otherwise contain any parts or components that
  are capable of performing any of the following
  "information security" functions? (Mark with an
  "X" all that apply)
• a. encryption
• b. decryption only (no encryption)
• c. key management / public key infrastructure
  (PKI)d. 9 authentication (e.g., password
  protection, digital signatures)
• e. copy protection
• f. anti-virus protection
• g. other (please explain) _____________________
  ___________________
• h. NONE / NOT APPLICABLE
• 2. For items with encryption, decryption and/or
  key management functions (1.a, 1.b, 1.c above)
• a. What symmetric algorithms and key lengths
  (e.g., 56-bit DES, 112 / 168-bit Triple-DES, 128
  / 256-bit AES / Rijndael) are implemented or
  supported?
• b. What asymmetric algorithms and key lengths
  (e.g., 512-bit RSA / Diffie-Hellman, 1024 /
  2048-bit RSA / Diffie-Hellman) are implemented or
  supported?
• c. What encryption protocols (e.g., SSL, SSH,
  IPSEC or PKCS standards) are implemented or
  supported?
• d. What type of data is encrypted?
• 3. For products that contain an "encryption
  component", can this encryption
• component be easily used by another product, or
  else accessed / re-transferred by
• the end-user for cryptographic use?

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What is the Harmonized Tariff System

• An indexing system adopted by most of the
  commercial countries of the world in 1989, for
  classifying products which are manufactured and
  sold in world commerce according to an
  agreed-upon numerical system.
• Common international classifications facilitate
  balance of trade statistics collection, customs
  classification, and country of origin
  determination
• Schedule B Export
• HST Import

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What is so Harmonized about this system!

• It was designed to replace the varied tracking
  methods used by countries and create one common
  classification system to track trade and apply
  tariffs.
• The basic system uses a 6-digit number to
  identify basic commodities. Each country is
  allowed to add additional digits for statistical
  purposes. The U.S. uses a 10-digit system for
  both.

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Who developed and controls

• The system was developed by the Customs
  Cooperation Council (CCC), now known as the World
  Customs Organization (WCO). The WCO, located in
  Brussels, is an international organization
  consisting of representatives of about 139
  countries or territories

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HS Codes Software Media

• HS Number Description
• 8523300000 Unrecorded, cards incorporating a
  magnetic stripe
• 8524600000 Cards, recorded, incorporating a
  magnetic stripe
• 8524310030 Discs for laser reading systems, for
  reproducing phenomena other than sound or
  image, prepackaged software of a kind sold at
  retail
• 8524310070 Discs for laser reading systems, for
  reproducing phenomena other than
• sound or image, nesoi
• 8524320000 Discs for laser reading systems, for
  reproducing sound only
• 8524394000 Discs for laser reading systems,
  nesoi, for reproducing data etc. In a machine
  readable binary form and capable of being
  manipulated
• 8524400000 Magnetic tapes for reproducing
  phenomena other than sound or image
• 8523200000 Unrecorded magnetic discs
• 8524910030 Diskettes - Prepackaged software for
  automatic data processing machines, of a kind
  sold at retail
• 8524910030 Internet based shipments requiring an
  SED to be filed - (Licensable
• Shipments)
• 8542218048 Monolithic integrated circuits,
  digital, silicon ( not volatile
  memory),electrically erasable programmable read
  only memory (eprom)
• 8542218058 Monolithic integrated circuits,
  digital, silicon, (not volatile memory), erasable
  (except electrically) programmable read only
  memory (eprom)

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Additional Resources

• Denver US Export Assistance Center
• SBA/SBDC
• Export/Import Bank
• Colorado Office of Economic Development
  International Trade
• Bureau of Industry and Security
• State Department
• US Census
• US Customs and Border Protection

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Thank You!

• Suzette Nickle
• Tel [phone] x16
• Fax [phone]
• Email Suzette.Nickle_at_mail.doc.gov

www.export.gov www.buyusa.gov/colororado