When we think of the term “export,” some typical images come to mind: a container on a truck or railroad well car, a cargo ship filled with steel containers or boxes and flats stowed in an airplane’s hold. It seems straightforward, right?
In general, an export occurs when something is shipped or transmitted out of the United States. In addition to physical cargo, exports include other actions that may not seem obvious:
- Hand-carries of items such as samples carried by a salesperson on their person and tools taken by a technician traveling abroad to perform their job function.
- Software transmitted overseas, as well as updates, bug fixes and service packs that are sent weekly or as needed from a U.S. server.
- Technology that is transmitted as technical data, such as diagrams, or technical assistance to an overseas party by phone, by fax or by email.
How the Regulations Define an “Export”
The Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) each clearly define what is or is not considered an export. These definitions were updated in 2016 under the Export Reform Control Initiative.
Under Section 734.13, the EAR defines an “export” as:
- An actual shipment or transmission of an item out of the U.S. in any form.
- The release or transfer of technology or software source code (but not object code) to a foreign person in the U.S. is considered a “deemed export” to the person’s most recent country of citizenship or permanent residency.
- The transfer by a person in the U.S. to a person in or a national of any other country of the registration, control or ownership of a spacecraft subject to the EAR that is not eligible for export under License Exception STA; or any other spacecraft subject to the EAR to a person in or a national of a Country Group D:5 country (subject to U.S. arms embargoes).
The ITAR, which governs a relatively limited range of arms and other defense articles and defense services, has a somewhat more expansive definition of “export” under Section 120.17 as:
- An actual shipment or transmission of an item out of the U.S., including the sending or transport of a defense article in any manner.
- Releasing or transferring technical data to a foreign person in the U.S. (a “deemed export” taking into account all countries where the foreign person has ever held citizenship, and currently holds permanent residency).
- Transferring registration, control or ownership of any aircraft, vessel or satellite subject to the ITAR by a U.S. person to a foreign person.
- Releasing or transferring a defense article to an embassy or any of its agencies or subdivisions, such as a diplomatic mission or consulate, in the U.S.
- Performing a defense service on behalf of, or for the benefit of, a foreign person, whether in the U.S. or abroad
- The release of certain previously encrypted technical data.
Are These Activities Considered Exports?
These rules show that more items are covered under the definition of “export” than initially expected. And the term export can apply in some cases in ways that seem counterintuitive. For example, it is possible to make an export of software or technology even if it doesn’t leave the U.S. This can occur when the software or technology is shared within the U.S. with a “foreign person” e.g. an individual is not a U.S. citizen or permanent resident. This may raise some issues for your company because even if the foreign person has a valid visa to work for your company, she may not have authorization to receive ITAR- or EAR-controlled technology.
A similar situation can arise with foreign customers who are visiting your company facilities and they observe processes or conditions that cause a release of technology to them. This is considered a “deemed” export because it is treated like an export to that individual’s country(ies) of citizenship or permanent residency.
Another example of a situation which may not seem like an export – but is – involves the transfer of registration, control, or ownership for certain kinds of aircraft, ships and satellites. Even though an airplane may still be on the ground in the U.S., once ownership is transferred to an overseas party, it is considered an export.
So…What’s NOT an Export?
- Sending technology or software between U.S. citizens who are located within the U.S.
- Moving items between or among the fifty states, District of Columbia, or U.S. territories such as Puerto Rico, Guam and the U.S. Virgin Islands. In other words, export controls do not apply to domestic shipments.
- Transmitting technology or software from a U.S. citizen located within the U.S. to another U.S. citizen within the country.
- Launching a spacecraft, launch vehicle, payload or other items into space. If your company puts a satellite on a rocket in the U.S. and launches it into orbit, that is not an export under the purview of the ITAR or the EAR.
- Sending, taking, or storing encrypted, unclassified technology or software under certain conditions so long as it is not intentionally stored in a country under arms embargo.
Keeping It All Straight
At ECTI, we understand how confusing these definitions of an “export” can be, as well as the challenges in applying these rules correctly to your company and its products. Our goal is to ensure that our learners leave with a clear understanding of the definition of export, and its scope and complexity. In our seminars, we help you gain a better understanding of what activities your company is engaged in, if any, that fall under the scope of these export regulations. We strive to help you learn the rules for exports and to appreciate their scope and breadth. Equipped with this knowledge, you will be better prepared to figure out what is applicable to your company and its operations.
Do you have questions about whether your company is categorizing and handling exports correctly? ECTI can help you understand the criteria and stay current on export regulations. Visit www.learnexportcompliance.com to learn about our company, our faculty, our staff and our esteemed Export Compliance Professional (ECoP®) certification program. To find upcoming e-seminars, live seminars and live webinars and browse our catalog of 80-plus on-demand webinars, visit our ECTI Academy. You can also call the Export Compliance Training Institute at 540-433-3977 for more information.
Scott Gearity is President of ECTI, Inc.