Understanding “Deemed Exports” and Their Role in U.S. Export Controls
What Are Deemed Exports?
In U.S. export controls, a "deemed export" refers to the release or transfer of controlled technology, technical data, or software to a foreign national within the United States. Under the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR), such a release is considered an export to the foreign national’s home country, even if the technology never leaves the U.S. Avoiding deemed export violations are crucial for preventing unauthorized access to sensitive information or technologies.
Deemed Exports and Export Controls
Deemed exports are relevant in environments like universities, research institutions, and multinational corporations, where foreign nationals may access controlled technologies. The Bureau of Industry and Security (BIS) under the Department of Commerce (for EAR-controlled items) and the Directorate of Defense Trade Controls (DDTC) under the Department of State (for ITAR-controlled items) require U.S. entities to obtain an export license before sharing controlled technology with foreign nationals.
Consequences of Deemed Export Violations
Violating deemed export regulations can result in severe consequences, including:
Civil Penalties: Companies may face substantial fines—up to $300,000 per violation under EAR or $1 million under ITAR.
Criminal Penalties: Willful violations can lead to imprisonment, significant fines, and other legal consequences.
Loss of Export Privileges: Violations can result in the suspension or revocation of export privileges, impacting international business.
Reputational Damage: Beyond legal penalties, violations can harm a company’s reputation and lead to loss of business opportunities.
Preventing Deemed Export Violations
To prevent deemed export violations, companies should:
Implement a Compliance Program: Develop clear policies, procedures, and training on deemed exports. Ensure all employees understand their roles in maintaining compliance.
Classify Technology and Data: Accurately classify all technology, technical data, and software to determine if they fall under EAR or ITAR controls.
Screen Employees: Screen foreign nationals before granting access to controlled technologies and determine if a license is required.
Apply for Licenses: Apply for deemed export licenses well in advance and ensure compliance with any restrictions.
Conduct Regular Audits: If necessary, implement robust internal controls, monitor access to controlled technologies, and conduct regular audits to ensure ongoing compliance.
Stay Informed: Keep up-to-date with changes in export control regulations and adjust compliance programs as needed.
Conclusion
Deemed exports are a vital aspect of U.S. export control regulations, and non-compliance can have severe consequences. By understanding deemed exports, implementing a comprehensive compliance program, and staying vigilant, organizations can prevent violations and ensure that sensitive information and technologies remain secure.
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Sources Cited
- Bureau of Industry and Security (BIS). "Deemed Exports FAQs." https://www.bis.doc.gov/index.php/policy-guidance/deemed-exports/deemed-exports-faqs
- Directorate of Defense Trade Controls (DDTC). "ITAR Overview." https://www.pmddtc.state.gov/ddtc_public?id=ddtc_kb_article_page&sys_id=d6e9865adb78d300d0a370131f961914
- United States Department of Justice. "Recent Cases and Penalties Related to Export Control Violations." https://www.justice.gov/
