information (name,

your subtitle and the

Export Compliance Facilitator: Steve Miles

Agenda for Today’s Webinar

Deep SenGupta, Sr. Manager – Trade & Customs

Advisory Services, FedEx Trade Networks

• Importance of Export Compliance

• Export Controls

• Do you need an Export License?

• Fines & Penalties

• How to develop an export compliance

management program (EMCP)

• Resources

• Q&A

May 15, 2012 2

Additional Panelists

In addition to our speakers, we also have others present to answer questions:

Arnethia Hopson– FedEx Express, Regulatory Consulting Group

Kosha Mehta – FedEx Services, U.S. International Marketing

Lucy Stanley – FedEx Services, U.S. International Marketing – Trade Promotion

May 15, 2012 3

How to Submit Your Questions

Click here to open the control panel

Under “Questions” you will find a panel to view submitted

questions and a text box to type in questions.

Type your question and choose to Send Privately (only

Organizers and Panelists will see) or Send to All (all attendees

will see)

May 15, 2012 4

Disclaimer

Every effort has been made to ensure the accuracy of this

presentation at the time of publication, but the comments herein are

necessarily of a general nature, are for information purposes only, are

subject to change as regulatory requirements change, and do not

constitute legal advice in any matter whatsoever.

You are urged to seek specific advise on matters of concern and not to rely

solely on this presentation.

May 15, 2012 5

EXPORT COMPLIANCE

Deep SenGupta, FedEx Trade Networks

May 15, 2012 6

Agenda

•Compliance Quiz

Importance of Compliance and Internal Controls

Basics of Export Compliance

– Do you need an Export license?

– Fines & Penalties

– How to develop an Export compliance management

program (EMCP)

May 15, 2012 7

Lets take a short Compliance Quiz

1.Do you have a Export compliance department?

2.Do you have an Export Compliance Program?

3.Do you have a Compliance manual to address the handling of Export-related

activities?

4.Do you have an up-to-date product dictionary with Schedule B and ECCN

numbers?

5.Have employees received annual training on Export procedures?

Get a feel for your current knowledge level on the topic of export compliance.

May 15, 2012 8

Quiz continued…

6. Do you ensure that you do not ship to prohibited end-users and embargoed

destinations?

7. Are internal audits performed frequently?

8. Are all export documents & filings reviewed for accuracy?

9. Are any export discrepancies reported to the Government?

10. Do you feel confident that your company could withstand a Export enforcement

audit ?

STOP! If you answered “NO” to any of these questions, then your company is

taking regulatory risks.

May 15, 2012 9

What is an Export?

• Export: Actual shipment or transmission of items out of the U.S.

• Re-export: An item of U.S. origin or that has a U.S. connection, exported

between two foreign countries

• Deemed Export: Any release of technology or source code subject to Export

Administration Regulations (EAR) to a foreign national is deemed to be an

export to the home country or countries of the foreign national.

May 15, 2012 10

Benefits of Compliance

• Doing it right the first time is cheaper than going back and fixing it later

• Demonstrated compliance will result in fewer cargo exams, penalties,

information requests, and delays resulting in less cost

• Less cost + customs processing time = Greater competitive advantage.

• Importing and Exporting is a privilege, NOT a right!

Companies benefit from proactively looking at export compliance rules and regulations which include cost savings.

May 15, 2012 11

Polling Question (1 of 4)

Do any of you know who pays for your shipment’s assessed duty and/or taxes?

1. We do – the shipper

2. Our customers do – the ultimate consignee

3. Our customers do – the importer of record (not the ultimate consignee)

4. I don’t know

May 15, 2012 12

Agencies That Regulate U.S. Exports

•U.S. Department of Commerce – Bureau of Industry and Security (BIS)

•Export Administration Regulations (EAR)

•U.S. Department of the Treasury – Office of Foreign Asset Controls (OFAC)

• U.S. Department of State - Directorate of Defense Trade Controls (DDTC)

◦International Traffic in Arms Regulations (ITAR)

•U.S. Census – Foreign Trade Division

◦Electronic Export Information

•U.S. Department of Homeland Security – U.S. Customs & Border Protection

The mission of the Bureau of Industry Security is to keep the most sensitive goods out of the most dangerous hands. Multiple agencies regulate the exporting of products across U.S borders.

May 15, 2012 13

Dual Use Items

NUCLEAR WEAPONS Centrifuges

Mass Spectrometers

Vacuum pumps

High-speed/Thermal cameras

BIOLOGICAL WEAPONS Bacterial Strains

Growth Media

Fermenters

CHEMICAL WEAPONS Precursors

Coolers

Heat Exchangers

Mixing vessels

MISSILES Composites & Aluminum Alloys

Machines Tools

Accelerometers

Some items are considered to have dual use purposes and are closely monitored and regulated.

May 15, 2012 14

Polling Question (2 of 4)

Do any of your export commodities need an export license from the Commerce Department or the State Department?

1. No – 0 Zero %

2. Yes – 1-25 % of our items

3. Yes – 26-50% of our items

4. Yes – 51-75% of our items

5. Yes – 76-100% of our items

May 15, 2012 15

IS ITEM SUBJECT

TO THE E.A.R?

EXIT THE

E.A.R.

YES

YES

NO

E.C.C.N.

E.A.R. 99

DO GENERAL

PROHIBITIONS

APPLY?

DO GENERAL

PROHIBITIONS

APPLY?

USING THE CCL &

COUNTRY CHART,

IS THERE AN “X”

IN THE BOX?

IS THERE A

LICENSE EXCEPTION

AVAILABLE?

SHIP

N.L.R.

SHIP UNDER

LICENSE

EXEMPTION

SHIP

N.L.R.

SUBMIT A

LICENSE

APPLICATION

NO

NO

NO

YES

YES

NO

YES

YES

E.A.R. = Export Administration Regulations

E.C.C.N. = Export Control Classification Number

C.C.L. = Commerce Control List

N.L.R. = No License Required

Do You Need an Export License?

No

IS ITEM CLASSIFIED

UNDER AN ECCN ON THE

COMMERCE CONTROL LIST?

(GENERAL PROHIBITIONS 1, 2 &3)

Start Here

http://www.bis.doc.gov/licensing/acronym.htm

May 15, 2012 16

Five Basic Steps

• Step 1: Determine Export Control Classification (ECCN)

− Check with manufacturer

− Work with design engineers, chemists, scientists

− Submit SNAP-R classification request to BIS to confirm

• Step 2: Check the 10 General prohibitions (Restricted party lists)

• Step 3: Check Country Chart - is there an “X” in the box?

• Step 4: If Yes, is a license exception available?

• Step 5: Apply for an Export license from BIS

Follow these five basic steps to determine if you need and export license to export your products.

May 15, 2012 17

Lists to Check

1.Denied Persons

2.Unverified List

3.Entity List

4.OFAC Lists

5.Debarred List

6.Changes published in Federal Register

7.Email alerts available from BIS

Internet sites provide exporting companies access to information to help you do your due diligence. Links to the lists can be found online at http://www.bis.doc.gov/complianceandenforcement/liststocheck.htm

May 15, 2012 18

Examples of “Red Flags”

• The product’s capabilities do not fit the buyer’s line of business

• The customer has little or no business background

• The customer or entity is reluctant to offer information about the end-use (or end-user) of a product

• The product order is incompatible with the technical level of the country to which the product is being shipped

A few items to watch for that may indicate that a deeper look may be warranted.

May 15, 2012 19

Bureau of Industry and security

Office of Export Enforcement

1.Overwhelmed by end of quarter orders and processing

2.New personnel using outdated go-by documentation

3.Export manager on vacation (cross train back up personnel)

4.Lack of communication with sales staff and foreign distributors.

5.Absence of an EMCP or written policies or controls.

How violations happen in good companies

May 15, 2012 20

Questions to Ask before Any Transaction

1.What agency has jurisdiction? –Which agency has jurisdiction over the item you wish to export

2.What is it? –What an item is, for export control purposes, depends on its classification, and

subsequent placing on the Commerce Control List (CCL)

3.Where is it going? –The country of ultimate destination for an export or re-export also determines

licensing requirements

4.Who will receive it? –The ultimate end-user of your item cannot be a “listed” end-user

5.What will they do with it? –The ultimate end-use of your item cannot be a controlled end-use

6.What else will they do? –Conduct such as contracting, financing, and forwarding freight in support of a

proliferation project may prevent you from doing business with someone.

May 15, 2012 21

Polling Question (3 of 4)

Do you currently have an export compliance program and process in place at your company?

1. Yes

2. No

3. I don’t know

May 15, 2012 22

Export Management Compliance

Program (EMCP)

• An optional program to assist exporters in complying with export controls by

establishing checks and safeguards at key steps.

• Stricter export controls over sales, order entry, traffic, logistics, carriers, and

vendors, tailored to your company’s unique requirements.

• Promotes a “best practices” business environment

• The establishment of mechanisms within the company that provide checks

and safeguards at key steps in the order processing system

• Employees need to know how to handle red flags (training, internal contacts,

escalation, etc.)

May 15, 2012 23

Benefits of Implementing a Program

1.Tailored to your company’s unique requirements

2.Stricter export controls over Sales, Order Entry, Traffic, Logistics, Carriers, and

Vendors

3.Helps to protect senior management from fines, penalties and prison.

4.Mitigating factor and voluntary self-disclosure

5.Promotes a “best practices” business environment

The implementation of a quality program has many benefits.

May 15, 2012 24

EMCP: Screening Elements

1. Determine product ECCN classifications & license requirements

2. Check the denied parties lists before order entry

3. What is the final destination?

4. Who is the end-user?

5. What is the end-use?

6. Possible nuclear, chemical, biological uses?

7. Any anti-boycott issues?

8. Checklist completed before shipping?

May 15, 2012 25

Best Practices for an Effective Program

1.Formal statement of management policy & commitment

2.Specific knowledge of Export regulatory requirements

3.Flowchart entire order process and identify contacts

4.Written manuals, documents and procedures necessary to ensure

Import & Export compliance

5.Build a database for Schedule B, HTS and ECCN

6.Use SNAP-R to confirm product’s ECCN

7.Effective DPL screening

Implementing best practices can help ensure your program is effective.

May 15, 2012 26

Polling Question (4 of 4)

Rate your comfort level about export compliance rules and regulations after today’s session.

1. Not at all comfortable

2. Somewhat more comfortable

3. Comfortable

4. Much more comfortable

5. Very comfortable

May 15, 2012 27

FedEx Trade Networks

• Customs Brokerage

• Global Shipping Solutions & Freight Forwarding

• Trade Facilitation Tools

Trade & Customs Advisory Services (“TCAS”)

Export & ITAR Compliance evaluations

Import Compliance evaluations

ECCN/HTS/HS Classification

C-TPAT & Cargo Security

NAFTA & Free Trade Agreements

OGA requirements

Managed Services

Training on the above topics.

May 15, 2012 28

Thank you for your participation!

Deep SenGupta

Sr. Manager - Trade & Customs Advisory Services (TCAS)

Mobile: 1.415.385.4894

E-mail: deep_sengupta@ftn.fedex.com

http://www.fedex.com/us/services/ftn/advisory.html

What questions do you have?

May 15, 2012 29