By: John Black
The risks of fines of hundreds of thousands — or even millions — of dollars for violations make export compliance important. The complicated, arcane, and voluminous regulations that impose incredible burdens on your day-to-day business activities make export compliance difficult. A thorough and effective multi-level company training program makes a reasonable level of export compliance achievable.
A company needs three levels of training
1) Expert training: The core export compliance experts need to be experts on the rules
2) Awareness training: A wide range of company personnel need to trained to know what issues export rules create and how to handle them or whom to ask for help
3) Executive training: Top level management needs to understand the risks of violation and how export rules impact the company’s business activities so management can decide how much money and resources to spend on compliance.
This article will focus on expert training. I will write articles later to discuss the other training.
A starting point for any company export compliance program is for the company to figure out what the rules are and how they apply they apply to the company’s products, technologies and activities. This usually means that the company, depending on its size and export issues, appoints one or two, or maybe a few people to be the export compliance experts. While someone new to export compliance theoretically could learn the rules by reading the rules, it is usually much better for the newbie to be taught what the rules say and how they work before digging into the voluminous, arcane, and complicated regulations. There are various export control regulations—the Export Administration Regulations (EAR), the International Traffic in Arms Regulations (ITAR), the Foreign Trade Regulations (FTR), plus the various Office of Foreign Assets Control (OFAC) regulations—and the company needs to know if and how each of these regulations impacts the company.
And, unfortunately, a quick glance is not enough and common sense won’t help—who would think the ITAR regulates exports of items involved in sending TV signals for the Sunday football game to your house? You need to learn what the rules actually say. Beware of company folk lore—“we’ve always done it this way,” or “if we sell to the military its ITAR, but if we sell to somebody else it is not ITAR,” or “the ITAR does not let you put technical data in the ‘public domain.’” You need to focus on learning the rules themselves.
Beware of oral information that contradicts the rules—whether from a government or other source. Sure, maybe today the government interprets the word “green” to include “yellow” because yellow is a precursor to green. But if the rules do not say that, and you act as if green does not include yellow, you have put yourself in a defendable position, to say the least. Most of us do not talk to every government official in Washington so that we know the interpretation of the day — and we don’t know if 99% or only 0.01% of the government interprets green to include yellow. Learn how to read the rules — then do what they say!
Once you start on the long path to becoming an expert on the rules, you have to figure out what procedures you will implement to help your company follow the rules. Technically, in most cases, implementing procedures is optional because it is not a violation to fail to have compliance procedures. It certainly is prudent, however, to implement compliance procedures if you want to do a good job on compliance.
Going to a live seminar is the best form of training. There is nothing better than being able to interrupt a knowledgeable speaker and ask a question when it pops into your head. A key part of live training may be the 5 minutes you spend at a break talking to the instructor about a specific issue. Electronic or online training is better than nothing if your company is not willing to pay for live training, or if live training is otherwise not an option.
In any event, you need to make sure the people giving the training are experts on the rules. They need to be able to give practical advice on the many different approaches you can take in implementing company procedures to follow the rules. Verify the expertise of the trainers. A person’s title or pay grade is not a key factor, nor is whether the person works in or outside of the government. The best thing to do is talk to industry experts who actually have received training from the person giving the training you are considering.
Your goal should be to become an expert on the rules, or perhaps an expert on the rules that specifically impact your company. This is a difficult task but you can do it. (If I can do it, anybody can, trust me.) To be an expert, you need regular and repeated training. The first training you get to introduce you to the topic may be overwhelming, so just try to pick the most important issues—for example, take away the fact that you need to do export jurisdiction determinations and classifications for all of your hardware, technical data and software, but don’t worry if you didn’t memorize the second exception to the first prohibition in the antiboycott regulations.
Go to each training after the first with two objectives. First, to hear people validate that what you think is true is true. These export rules are often illogical and hard to believe so you might start doubting your understanding. You will get value from just listening to somebody say that a convoluted rule means what you think it means. You second objective is to learn more. Eventually you need to understand the second exception to the first prohibition in the antiboycott regulations. I know people who are experts and continue to attend the same seminar 5 – 10 times because they always get something new out of it.
If you are an export compliance professional, you need to embrace this reality: The more you learn about the export compliance rules, the more difficult it becomes to comply with the rules. Think about it: A novice thinks export controls just mean taking care of exports of products. As that person learns more he realizes that export compliance applies to hundreds of emails leaving his facility daily, and then that his employees with work visas present export compliance issues. More and more training will not make your life easier, but will likely just add more things to your list of things do to as you learn about a rule you did not know about, or as you notice a different aspect of a rule.
As you can see, training is not a onetime event. You should be training at least once a year, and I recommend twice a year in most cases. I already discussed how the complexity of the rules calls for repeated training. These rules also change. The government procedures often change (hmm, the ITAR Agreement Guidelines come to mind!). You need to stay up to date with changes and continue to grow and build your expertise.
Having well trained export compliance experts is good for your company. Being a well-trained export compliance expert is good for you. As your expertise grows, so does your confidence in your knowledge, and that puts you in a better position to tell your engineer “yes, it is true that we have to treat the employee with a work visa as an export issue.” You will encounter people who want to comply with what the rules ought to say or what they would like for them to say. You argue against those people by showing them what the rules say. Your expertise will enable you to point to the rules as the basis for the positions you take so you can say “maybe it does not make sense, but this is what it says.”
And, of course, being well trained on export compliance is a valuable addition to your resume!
John Black has been in the field of export controls since 1984, is a consultant with BSG Consulting and a regular speaker for The Export Compliance Training Institute (ECTI). ECTI offers live seminars for US Companies and companies located overseas. The current schedule of their seminars can be found at http://learnexportcompliance.com/schedule