Exports are on the rise, due to an advantageous US exchange rate and with the Obama administration’s new National Export Initiative, this trend is likely to continue for many years to come. With this new “top-line” opportunity, however, comes risk. Not all companies are aware of their obligations as an exporter to know their customer, know their products, and know the regulations. Exporting is a privilege and when it comes to understanding the regulations, ignorance is not an excuse. To help exporters structure and maintain a comprehensive compliance process, the US Department of Commerce has recently published guidelines (http://www.bis.doc.gov/complianceandenforcement/emcp_guidelines.pdf) that describe key requirements across the dimensions of people, process, and systems.
Know Your Product. The first key challenge is to understand that the products you are exporting are in compliance with the Export Administration Regulations (EAR). By properly classifying your products you can determine if the product does have dual use, that is, does it have a commercial application and either a military, weapons-of-mass-destruction, or potentially terrorist application. If it does, then a license will be required. We find that some companies make an assumption (or hope) that they do not export sensitive products. Still others believe that forgiveness is easier than permission. It isn’t. To properly know your product you need the right tools to classify goods and maintain and share this compliance information across the company and integrate this information with your order management process.
Know Your Customer. The second key challenge is to understand who is buying your product. Simply put, the first line of our national security is business. It is critical that we protect our national interests by keeping sensitive products and new technologies from being distributed to countries of concern or to persons that would use them against our country. In a recent study, we discovered that one-third of the companies surveyed reported that a denied person has attempted to engage their company. To ensure that you are not selling to a restricted party, you need to screen against a comprehensive set of sanctioned party lists and have the tools to properly manage potential hits.
Know The Regulations. The third key challenge is to know the regulations and protect your company from fines and the potential loss of export privileges. Many companies look to centralize the compliance function as a means of providing consistent training and dissemintiation of regulatory material. Also by providing a common export system that integrates with content that is up-to-date with the latest trade regulations, the compliance organization can establish the visibility and control they need over the exporting activities of business units.