US Boosts End-Use Checks Alongside Export Reform, Say Commerce Officials
The Commerce Department is conducting unprecedented levels of investigations into U.S. export diversion as enforcement officials boost end-use checks and expand outreach to U.S. companies, said Assistant Secretary of Commerce for Export Enforcement David Mills in a Nov. 3 speech at the Bureau of Industry and Security’s Update conference. Commerce is ramping up export investigations globally, particularly on Russia and China shipments, he said, noting that the U.S. has come “full circle from the Cold War era” in its export outlook on Russia. The U.S. is also targeting Islamic State “procurement of U.S.-origin items, like spare parts for oil refining, which fund their reign of terror across the Levant.”
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Boosted End-Use Checks
The office of export enforcement conducted more than 1,000 end-use checks in 55 countries in 2014, said Mills. Export Control Officers (ECOs), who are stationed across the globe, led more than 170 programs to train foreign governments and companies on Export Administration Regulations compliance, he said.
A set of ECOs touted their efforts at an Update panel the day before. The Chinese government and private companies are generally willing to facilitate U.S. post-license checks and post-shipment verifications, but Commerce faces far greater challenges in South Korea, said Arthur Roy, an ECO stationed in the Beijing office, which covers both countries. “We have had some limited success occasionally in doing end-use checks in South Korea. Some companies have refused to cooperate,” Roy said. “They’re sometimes not overly concerned that the U.S. government wants to talk to them.”
Despite the global shift to electronic filing, the U.S. is still combating fraudulent physical documentation, said Donald Pearce, the outgoing ECO in Singapore. That office covers Malaysia, Indonesia, Vietnam, Australia and New Zealand. “Fraudulent documents are something that can be easily spotted in most cases nowadays because so much is done electronically and can be independently verified on the internet,” said Pearce. “That doesn’t work everywhere though, especially places such as places in the region where I was covering where physical documents still have handwritten numbers.” Still, all those ECOs urged exporters to thoroughly research their end-users online.
Commerce is currently moving its ECO in Moscow to Frankfurt after Russian President Vladimir Putin issued an order to complicate the ECOs ability to conduct end-use checks, said Kevin Kurland, director of the office of enforcement analysis, on Nov. 3. The Guardian Lead program, which involves government outreach to industry on suspicious shipments, has prevented goods from entering “proliferation supply chains,” said Kurland. In 2014, that program “resulted in more than 150 outreaches to industry involving suspicious inquiries, an all-time high for this program,” said Mills.
U.S. Boosts Crackdown on Israel Boycotters
The U.S. continues to implement a ban of some dealings with foreign companies that participate in the boycott of Israel, and Malaysia has now emerged as the largest source of boycott language for U.S. companies, said Cathleen Ryan, head of the Commerce anti-boycott office. The United Arab Emirates, Qatar and Iraq follow as sources of boycott language in commercial documentation, she said.
The anti-boycott office is poised to introduce electronic filing for U.S. companies, Ryan added. “We’re ready to flip the electronic switch. Unfortunately, we haven’t been able to flip the administrative switch yet,” she said. “We still need some paperwork approvals, etc. but we hope to have this out there by the beginning of the new year.”