The U.S. government continues to vigorously enforce U.S. export laws against both U.S. and non-U.S. companies. In addition to monetary penalties, companies charged with violating U.S. export laws may be subject to strict compliance obligations. In extreme cases, the U.S. government may even suspend a company’s export privileges.
In this webinar, we will discuss recent
On October 12, the U.S. Commerce Department, Bureau of Industry and Security (BIS) announced that it imposed a civil penalty fine against VTA Telecom Corporation (VTA) for the unauthorized export of controlled commodities to Vietnam. Additionally, BIS is requiring VTA to improve its export control compliance efforts and retain a Director of Trade Compliance. Alternatively, VTA can dissolve or cease operations.
VTA, located in Milpitas, California, was established in 2013 as a subsidiary of a Vietnamese state-owned telecommunications company. BIS is the primary U.S. government agency responsible for administering and enforcing export controls on commercial items that could support weapons proliferation and other threats to U.S. national security.
According to BIS, VTA procured and exported items from the United States to its parent company in Vietnam with knowledge that certain of those exports were intended to support a Vietnamese defense program. To settle the matter, VTA agreed to the following:
On September 28, the U.S. Commerce Department, Bureau of Industry and Security (BIS) announced that it has imposed a civil penalty fine and denial of export privileges against Vorago Technologies (Vorago) for the unauthorized export of controlled commodities to Russia.
Vorago is a U.S. manufacturer of integrated circuits for use in environments with high radiation levels and extreme temperatures. The company’s products are particularly well suited for use in space. BIS is the primary U.S. government agency that administers and enforces U.S. export controls on commercial items, including particularly strict licensing requirements on items that can be used with weapons of mass destruction or conventional weapons.
According to BIS, Vorago engaged in a conspiracy with a Russian company, Cosmos Complect (Cosmos), to circumvent U.S. export controls. To settle the matter, Vorago agreed to the following:
The denial of export privileges, and roughly half of the penalty, will be suspended as long as Vorago complies with the terms of the settlement.
Continue Reading U.S. Technology Company Pays for Unauthorized Exports to Russia
I recently authored an article for Law360 offering an inside look at two U.S. Department of Commerce committees responsible for interpreting how national security and foreign policy should be applied to transactions involving the export, re-export and transfer of U.S. technology. I served on both committees – the Export Administration Operating Committee (OC) and the Advisory Committee on Export Policy (ACEP); I was chair of the OC and executive secretary of the ACEP until joining Bass, Berry & Sims. The article lends important insight to the closed-door processes each body uses and provides clarity on how national security decisions are reached.
While the chair of the OC has decision-making authority (with certain exceptions where decisions are made by interagency vote), the ACEP is the body that reviews cases where a government agency does not agree with the OC chair’s decision. “The decisions of these bodies are where the rubber meets the road in export control implementation,” I explained in the article. “Export control is a key feature in determining whether the U.S. will continue to maintain its technological supremacy, or China or another country will catch up or surpass the U.S.”
In addition to a neutral chair of the OC, who also serves as executive secretary of the ACEP by law, and the politically appointed ACEP chair, representatives from the Department of Commerce, Defense, Energy and State sit on the OC and ACEP. At the OC level, the chair makes a decision based on recommendations from the four agencies (again, with certain exceptions). At the ACEP, decisions are based on a majority vote and where the vote is a tie, the decision reverts to the OC Chair’s decision. The goal of the balanced interagency structure at the OC level is to prevent a single agency from dominating the process. The ACEP’s process aims to resolve situations where the regulatory standards and policy are not clear and have led to disagreements among agencies at the OC, including giving policy guidance for OC members to apply in similar situations going forward.
On August 3, 2021, the U.S. State Department Directorate of Defense Trade Controls (DDTC) issued an order laying out charges and imposing a monetary penalty of $6.6 million on Keysight Technologies, a U.S. technology and software company, for 24 alleged violations of the International Traffic in Arms Regulations (ITAR). The ITAR are the primary U.S. regulations that control exports of defense articles, services, and technology, including software.
Keysight and DDTC settled the matter through a Consent Agreement that also requires Keysight to take specific compliance measures, including maintaining a designated compliance officer, for a period of three years.
We want to highlight three particular elements of this matter.
Continue Reading Export Enforcement Update: The Importance of Commodity Classification