Export Safe Overview

EXPORTSAFE OVERVIEW

Trade Compliance Coaching

www.exportsafe.com

Wednesday, April 28, 2010

About

• ExportSafe is an international trade compliance firm providing small and mid sized
business with export/import compliance coaching and services. We provide assistance
with issues involving ITAR, EAR, Customs, OFAC and ATF.

• Our mission is to provide pertinent, precise and up to date information and guidance as it
relates to export compliance. We strive to ensure that our clients understand and meet
trade compliance requirements in a way that aligns with their business needs.

• ExportSafe brings over eight years of trade compliance and over 25 years of defense and
aerospace industry experience to the table. Not a law firm or a regulator, we bring real
world expertise to bear on problems facing companies that are dealing with trade
compliance with an understanding that customization to your business is key.

• ExportSafe maintains active relationships with other compliance and regulatory experts in
addition to advisors throughout the industry. In cases where legal advice is a requirement,
we can provide a list of highly qualified attorneys that specialize in trade issues.

• Located in the Dallas-Ft.Worth area, ExportSafe can provide assistance to local, regional
and national clients.

www.exportsafe.com Copyright 2010 ExportSafe


ExportSafe Services

• Our services include:
✓ Commodity Jurisdictions and analysis
✓ Registration
✓ Compliance Assessments and Audits
✓ Voluntary Disclosures
✓ Training in export compliance issues, onsite and
virtual classes
✓ Establishment of Export Compliance Programs
✓ Compliance Manual Development
✓ Implementation of Systems to manage compliance
transactions
✓ License and Agreement Preparation and Submission
✓ Liaison with U.S. Government regulators on your
behalf

• Clients are billed on an hourly basis with no retainer
required
✓ Rates are highly competitive
✓ No minimum hourly requirements



All exports from the United States are Controlled
ITAR and EAR either by the ITAR or the EAR.

• The International Traffic in Arms Regulations or the “ITAR” is under the
jurisdiction of the U.S. Department of State and controls the export of defense
articles and services. 22 C.F.R. §§120 et seq enact the Arms Export Control Act
(“AECA”). The AECA provides the authority to control defense articles and
services where the ITAR implements the law and provides guidance.

• The ITAR controls items and services on the United States Munitions List “USML”,
provided in section 121 of the ITAR. The list contains 21 categories of controlled
items. Items on this list and associated services require authorization to export
from the U.S. Department of State.

• The Export Administration Regulations (“EAR”) under the jurisdiction of the U.S.
Department of Commerce controls all imports/exports that are NOT controlled by
the ITAR. The Bureau of Industry and Security (“BIS”) regulates and administers
the EAR 15 C.F.R. §§730 et seq.



Commodity
Jurisdictions Determining whether or not your article or service is
controlled under the State Department or Commerce
Department is a critical first step. We will assist you in
determining proper jurisdiction and classification under
ITAR or the EAR.

• The Commodity Jurisdiction (“CJ”) process is used to determine whether or not an
item or service is covered by the United States Munitions List (USML). We will
help you analyze the applicable jurisdiction by reviewing the origin and
application of your article or service and create a self classification procedure
where applicable.

• If self determination is inconclusive, we will assist you in filing a formal
Commodity Jurisdiction request and help you establish appropriate control and
authorization mechanisms after jurisdiction is determined.

• For EAR items we will assist you in identifying the Export Classification Control
Number and identify in what circumstances Commerce licenses are required.



All persons that manufacture or export defense articles or
Registration services are required to register with the U.S. Department
of State. Do you need to register if you don’t export?

• ExportSafe will help you with the registration process and will assist you in the
evaluation and selection of persons that can act as key compliance personnel and
Empowered Officials.

• Who can register
✓ A US Person as defined in §120.16 of the ITAR
‣ An individual or business
✓ A foreign government
✓ A foreign person who is a broker as defined in §129 of the ITAR

• Annual registration of $2250 (or more based on number of licenses)

• Empowered Officials are U.S. Person employees that are entrusted with specific
responsibility and authority to maintain and apply export compliance policies
within an organization and to help ensure registrants have a level of understanding
of export compliance regulations. All registrants must have at least one
Empowered Official although in some cases that need not be the employee’s only
job.



Compliance Are you at Risk? Do you understand the penalties? Can you
afford to take chances? Civil fines of up to $500,000 per
Assessment and occurrence are just one deterrent. Criminal penalties
Audits include jail time and up to $1,000,000 per occurrence.

• Prior to any analysis, ExportSafe will enter into a mutual Non Disclosure
Agreement to make sure that you understand that your information will be held
confidentially. In certain cases, ExportSafe may recommend legal counsel to
ensure the protection of client attorney privilege.

• ExportSafe works with you to determine your current state of compliance.
✓ Evaluate the scope of your current compliance activities in the context of your current
business
✓ Determine deficiencies and identify trouble spots
✓ Identify any current issues that might be considered violations and suggest appropriate
action

• An onsite audit is an in depth investigation that examines:
✓ Your facility, security, communications
✓ Existing policies and procedures
✓ Sales, Manufacturing and Shipping records
✓ Existing business relationships



Compliance ExportSafe will assist you in the creation of a
comprehensive compliance program that is tailored to
Manual address your specific criteria.

• A comprehensive compliance
program should include a manual
(printed and/or electronic) that
contains the policies and procedures Company
Regulations
that guide employees in Standards
implementing your company’s
program.

• Elements of an effective compliance
manual will include: Efﬁcient Technology
Workﬂow Control
✓ Organizational Structure
✓ Corporate Commitment and Policy
Statements
✓ Identification, Receipt and Tracking
of ITAR Controlled Items/Technical
Data
✓ Restricted Prohibited Exports and
Transfers
✓ Record keeping
✓ Internal Monitoring



An ongoing training program will aid you in communicating
Training your companies dedication to export compliance while
making sure your staff knows the basics and where to turn
in case of questions.

• Training is customized to meet the
scope of international trade you are General
ITAR USML
engaged in and is based on the latest Policies
and up to date information available
from the different regulatory Record
agencies. Deﬁnitions Brokers
Keeping
• Web based and onsite classes can be
Agreements Violations EAR
provided. Choose web based training
for some of your staff and classroom
instruction for others. We can work
with your location and schedule.

• Pricing for training varies with the
number of students and level of
training desired.



A successful compliance program contains many
key elements that over time become a common
Compliance part of the company culture. ExportSafe will help
Program you craft a trade compliance program that meets
the needs of your company. Though common
Development elements exist, this is not a one size fits all
activity.

• A successful program will contain:
✓ A corporate commitment with support from executive management
✓ Definition and communication of the corporate compliance organization
✓ Creation of Policies and Procedures that become part of the Corporate Compliance
Manual
✓ Training
✓ Tracking and Monitoring
✓ Record Keeping in accordance with ITAR regulations
✓ Systems to help you manage your export transactions



ExportSafe will help you identify, define and optimize
Exports processes that will ensure compliance with current
regulations. Do you understand deemed exports?

• Exports are defined as:
✓ Sending or taking a defense article out of the
United States in any manner, except by mere
travel outside of the United States by a person
whose personal knowledge includes technical
data; or
✓ Transferring registration, control, or ownership
to a foreign person of any aircraft, vessel, or
satellite covered by the U.S. Munitions List,
whether in the United States or abroad; or
✓ Disclosing (including oral or visual disclosure) or
transferring in the United States any defense
article to an embassy, any agency or subdivision
of a foreign government (e.g., diplomatic
missions); or
✓ Disclosing (including oral or visual disclosure) or
transferring technical data to a foreign person
whether in the United States or abroad; or
✓ Performing a Defense Service on behalf of, or for
the benefit of, a foreign person, whether in the
United States or abroad.



You need to identify and control access to defense articles
Defense Article by non U.S. Persons, even those that are your own
employees.

• § 120.6 of the ITAR defines a Defense Article as:
✓ any item or technical data that exists on the United States Munitions List or is an item
that can be designated or determined by policy to be a defense article.

• An article can be determined to be controlled by the USML if it:
✓ Is specifically designed, developed, configured, adapted or modified for a military
application, and;
✓ Does not have a predominant civil application, and;
✓ Does not have a performance equivalent (form, fit, function) to those of an item or
service used for civil applications; or
✓ Is specifically designed, developed, configured, adapted or modified for a military
application, and has significant military or intelligence applicability such that control
under this subchapter is necessary.

• The intended use of an item or service after its export is not relevant in
determining whether the article or service is controlled under the ITAR.



Technical data can present special challenges. Unlike a
physical item, intangible forms of controlled articles such
Technical Data as computer software, emails and electronic documents
may require authorization prior to export.

• § 120.10 of the ITAR defines Technical Data as:
✓ Information other than software, which is required for the design, development,
production, manufacture, assembly, operation, training, repair, testing, maintenance
or modification of defense articles. This includes information in the form of blueprints,
drawings, photographs, plans, instructions or documentation.
✓ Classified information relating to defense articles or services;
✓ Information covered by an invention secrecy order;
✓ Software directly related to defense articles

• The ITAR does not control information that is general scientific, mathematical or
engineering principals commonly taught in schools, colleges and universities or
information in the public domain as defined in the ITAR.

• Basic marketing information on the function or purpose or general system
descriptions of defense articles is not considered tech data.



Helping you understand and properly monitor the provision
of defense services is a critical aspect of export
Defense Service compliance. Is using public domain information while
providing a defense service controlled?

• § 120.9 of the ITAR defines a Defense Service as:
✓ The furnishing of assistance (including training) to foreign persons, whether in the
United States or abroad in the design, development, engineering, manufacture,
production, assembly, testing, repair, maintenance, modification, operation,
demilitarization, destruction, processing or use of defense articles;
✓ The furnishing to foreign persons of any technical data controlled under this
subchapter, whether in the Unites States or abroad; or
✓ Military training of foreign units and forces, regular and irregular, including formal or
informal instruction of foreign persons in the United States or abroad or by
correspondence courses, technical, educational, or information publications and media
of all kinds, training aid, orientation, training exercise, and military advice.

• Defense Services may not include skills training when not of a military nature. For
example, teaching the use of a word processing package or spreadsheet would not
typically be considered a defense service. The key element is the nature of
training, to whom and to what end.



Mr. John Perser

• John Perser is the CEO and principal trade analyst of ExportSafe. Before starting ExportSafe in 2008,
he served as a key individual and executive in a world class simulation and training organization,
MultiGen. Mr. Perser was chosen to establish and administer export compliance activities for
MultiGen in 2002 after MultiGen was faced with issues surrounding the sale of controlled software
and services outside the United States. Successful implementation of a compliance program and the
subsequent conclusion of a Consent Agreement with the U.S. Department of State provided Mr.
Perser with a desire and the skill set needed to help other organizations like MultiGen avoid costly
penalties and potential criminal charges. Mr. Perser has held executive, operations management
and technical positions in organizations such as Texas Instruments, Kodak, Computer Associates and
MultiGen-Paradigm.

• Mr. Perser is an active member of the Society of International Affairs, an internationally recognized
body that provides training on a regular basis in basic and advanced topics in international trade,
principally, arms export control. He publishes a blog at http://blog.exportsafe.com that deals with
current trade issues and actively participates on committees and educational panels dealing with
international trade. He is also a member of the Project Management Institute

ExportSafe
www.exportsafe.com
blog.exportsafe.com
Phone: 972-722-9185 Fax: 866-920-7023 Cell: 214-450-7053



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