Everyone dealing with U.S. controlled goods regulations has had the (dis)pleasure of managing multiple control regimes including the International Traffic in Arms Regulations (ITAR), Export Administration Regulations (EAR) and Office of Foreign Assets Control (OFAC).
Most people (and justifiably so) have for years begged for a more simplified approach from the government. They now have the Export Control Reform in its various stages of rollout and are asking questions like “What do we do now?” as they adapt to the changes and new ways of business. But this pales in comparison with what their counterparts in the E.U. have to deal with on an ongoing basis.
The European Union was originally built to improve trade among its member nations, and in a lot of ways it has accomplished its goals. The E.U. has eliminated Tariffs among member states, making the intra-European trading of goods much easier insofar as landed costs and tariffs are concerned. But when it comes to the trade of controlled goods a lot of complexities and challenges are introduced. The European Union compliance community is almost like dealing with export control reform but on a larger scale. In particular, there are three major areas of challenge:
Classification
Each country in the E.U. has to deal with—at a minimum—three different sets of classifications:
- European Union controlled goods
- Wassenaar Agreement
- Individual countries’ National Controls (in country-specific language), with some having both Dual Use and Military classifications
Multi-regime classifications require keeping track of all controls to ensure compliance when exporting goods. If a product happens to be a U.S. controlled good, a whole new element of regulations is introduced. Multiple classification requirements mean having to correctly classify your goods and having a working knowledge of all pertinent regulations. It also means that you may have multiple export license requirements and license tracking responsibilities
Restricted Party Screening
Restricted or Denied Party Screening in the E.U. presents a number of challenges to E.U. exporting companies. Businesses in the E.U. should be screening (at a minimum) the E.U. Consolidated lists and UN lists. There are also additional considerations:
- Screening lists that are independently produced by certain countries, such as the UK Financial Consolidated list
- Restricted Party Screening enables companies to maintain their status as Authorized Economic Operators (AEOs), and compliant with Anti-Bribery requirements under the UK Bribery Act and the Foreign Corrupt Practices Act (FCPA). The E.U. and each individual member country have very stringent privacy laws that make this regulatory requirement extremely complicated to follow
Once again, there are multiple regimes to consider; each country needs to comply with E.U. Sanctions and Embargoes, as well as United Nations Sanctions and Embargoes. And as if that’s not enough, each country has its own unique set of Sanctions and Embargoes.
Solutions
Fortunately, companies need not face the complexities of the E.U. alone. The right automation tools can help businesses successfully meet their compliance requirements. There’s no magic pill that addresses all the needs for international trade or even automates all functions; however there are some excellent, reliable and time-saving solutions available:
- Automated Denied Party Screening to ensure you’re not doing business with undesirable entities, while also creating audit records to prove that you’ve checked out your trade chain partners prior to doing business
- Classification tools. Classifying under many different regimes can be complex and overwhelming – a search tool that allows you to check against several different sets of regulations simultaneously is essential. For subsequent license determinations, an automated approach will help reduce human error and oversight
- Sanctions & Embargo checks. By simply providing the destination country, you can be made aware of any Sanctions, Embargoes or even Regulations that your export may fall under
A properly designed, maintained and updated solution can help make exporting much easier… and keep you compliant.