Export regulations do not simply control the movement of goods,
but can also apply to the sharing of information. In this QAD
Precision Report we look at the “deemed export” laws of the United
States and what these restrictions mean for manufacturers and universities.
Ask just about anyone what an “export” is and they will define the
term as goods — and sometimes services — produced in
one country and made available for sale in another. While that is an
export, the term encompasses far more than the movement of items or
services from one country to another. The term “export” can refer to
any one of the following five examples:
The physical transfer of goods to a foreign country
Physically transferring information to a foreign country by
carrying it in on a laptop, USB or other data device
Electronically transferring information by uploading it to a
foreign server or sending information overseas using email, text
messaging or other means of electronic communication
Allowing foreign nationals to access information, such as
databases or software
Other forms of communication or data transfer, including
You will notice that four of the five examples above refer to the
transfer, electronic or otherwise, of information. You will
also note that this information does not necessarily have to be
physically sent to a foreign country — granting a foreign national
access to data is the same as exporting it to a foreign country.
What is a Deemed Export?
Manufacturers, exporters and any commercial entity that ship goods
internationally must abide by export regulations. These include
screening all parties to the transaction against restricted party
lists, validating that the country of destination or that parties to
the transaction are not subject to sanctions or other embargoes, and
ensuring that the licenses are valid and correct where required.
The United States, however, also requires manufacturers and other
entities to abide by “deemed export” laws when sharing certain
technology with, or disclosing information to, foreign nationals based
in the US. Under US law, a “foreign national” is anyone who does not
have US citizenship, or who does not have permanent residency or
refugee status in the US.
Technology and information that may be subject to deemed export laws
include proprietary technology, dual use goods that have both military
and civilian applications, technology controlled for physical export
to a particular foreign country, or technology that includes both US
and foreign inputs.
Generally speaking, if an item has a specific Export Control
Classification Number (ECCN) and appears on the Commerce Control List
(CCL), you would need an export license from the Department of
Commerce before you could ship the item from the US to a foreign
country. These goods would also be subject to deemed export laws.
Manufacturers may not make such technology available to foreign
nationals based in the US. Even allowing visual inspection of
databases, blueprints, technical specifications and so forth could
Export Restrictions and Dual Use Goods
It is unsurprising that governments and regulatory bodies place
restrictions on dual use goods that can have military as well as
civilian applications. Should these goods fall into the wrong hands,
they could support terrorist, criminal or other illegal activities.
In the United States, the Export Administration Regulations (EAR)
oversees the export of commercial and dual use items. Along with EAR,
the International Traffic in Arms Regulations (ITAR) is responsible
for controlling the manufacture, export, and import of military goods
Deemed Exports and Foreign Manufacturing
The global nature of contemporary supply chains and manufacturing can
make deemed export regulations somewhat tricky to navigate. For
example, technologies developed outside of the US, but that contain
US-origin technology, may be subject to US deemed export regulations.
In addition, manufacturers or other enterprises may need an export
license if they employee researchers, technicians or experts that are
foreign nationals. You may also need an export license if you invite
foreign visitors to tour your facility.
Furthermore, manufacturers that outsource production must ensure that
the production technology that they plan to send overseas is not on
the CCL or subject to other government restrictions. Manufacturers
will need the necessary export licenses before sending controlled
production technology to foreign nationals or allowing access to this information.
Deemed Export Laws and Universities
Deemed export laws are not restricted to manufacturers and other
commercial enterprises — universities must ensure that researchers and
students act in accordance with export regulations.
Should a university be conducting research on technology that has
dual use applications, the university must comply with dual use
restrictions. If foreign nationals are part of the research team, or
if the university is collaborating with an overseas academic
institution, deemed export laws are likely to apply.
However, it is important to note that fundamental research conducted
by universities is exempt from export controls. Under US export law,
this is the Fundamental Research Exclusion (FRE).
In order for FRE to apply, the following conditions are necessary:
The researcher or research team must be conducting basic or
Researchers will publish their results and share them publicly
with the scientific community
No restrictions apply, such as the results being subject to a
non-disclosure agreement or requiring approval by sponsors prior
As you can see, FRE does not apply if the researcher or university
signs a non-disclosure agreement or accepts other restrictions from a
sponsor. Under such circumstances, this becomes “proprietary research”
as it is restricted for commercial or national security reasons.
It is important to note that FRE only applies to publishable results
— not to inventions, technology or equipment. As a result, research
conducted in a number of disciplines such as science, technology,
engineering and mathematics, may overlap with export controlled technologies.
The Importance of Compliance Screening
Enterprises and universities that create, research or in other ways
work with restricted technologies and dual use goods must educate
staff about the importance of complying with deemed export
regulations. It is vital that staff do not commit violations by
sharing or transmitting information or technology with those
restricted from accessing it.
Any commercial body or research institution that sends technical
specifications, blueprints, samples, or sensitive data that is
restricted is obliged to screen trading partners, vendors, suppliers
and other parties.
Restricted party lists and sanctions and embargoes are subject to
change. This can make keeping up to date with the latest restrictions
an onerous task if done manually. Nonetheless, compliance is the
standard and due diligence is necessary. Automated
screening removes much of this burden and helps to ensure that
restricted information and technology is not sent to persons that
violate deemed export regulations.
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