We all get stuck in our ways sometimes. Some of us have had the same hair since 1980, others of us can’t let go of that old sweatshirt from high school. Some have trouble embracing the latest fashion trends. Those things can all be overlooked, but your Compliance Manual should always embrace the latest regulations.
Take a look at your Compliance Manual. Does your manual define Defense Articles as “specifically designed, developed, configured, adapted, or modified for a military application”? Does it still provide one Destination Control Statement for EAR-controlled exports and another for ITAR-controlled exports? Does it still define “export” 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…”? Does it explain to you how to complete and file a Shippers Export Declaration at the port of export?
If the answer to any of the above is YES, your Compliance Manual is in serious need of a make-over.
Why are Updates So Important?
A Compliance Manual is meant to be a “living document”. Regulations change, government policies change, processes change and your manual must stay current with those changes. A Compliance Manual is not meant to be written in stone, only tombstones get written in stone, but if your Compliance Manual is written in stone, and it is dated or no longer accurate, the tombstone could be for your company.
Picture this scenario: Government agents come to visit your facility to speak about export compliance. They politely ask if you have a Compliance Manual with written processes and procedures. You do and are only too pleased to tell them you do. They ask if they can have a copy. Of course, you want to show them how cooperative you are and how compliant your company is, so you provide a copy. PROBLEM: The Compliance Manual was written in 2012, and although the company follows the procedures and processes, it has never been updated. Congratulations, you just gave those Government agents a “road map” for what to review should they want to return for a not-so-friendly 2nd visit.
DDTC's New Registration Form
A far-fetched scenario? Not so much, but let’s examine another aspect of having a current accurate Compliance Manual with written procedures for compliance. DDTC intends to roll-out its new Registration Form (DS-2032 v5.2) shortly. The new proposed Registration Form will contain a number of changes and will be usable for Registrations, Renewals, Amendments and Cancellations. What should get your attention immediately is the new Block 10 question:
ITAR Written Policies
Does the applicant have written policies and procedures for compliance with the ITAR (including but not limited to 22 CFR 122.5)?
Yes or No
DDTC advises that the reason for this question is so the answer can be used in the review and action on registration requests and to ensure compliance with defense trade laws and regulations. The last Federal Register Notice (84 FR 3846) also states that information from the Registration Form “…may be shared with other U.S. Government entities.” So the question is a “Catch-22” situation. Answer “NO” and the effectiveness of your company’s ability to maintain compliance with the ITAR comes into question. Answer “YES” and DDTC or any other U.S. Government entity with whom the information has been shared has a starting place to evaluate the level of your company’s compliance. Therefore, your Compliance Manual and its written processes and procedures need to be accurate and up-to-date.
Over the past five years, there have been many changes to export regulations. These have not been limited solely to the transition of jurisdiction of items that are controlled, but have also included changes in definitions as the EAR and the ITAR attempt to harmonize definition previously exclusive to each jurisdiction, changes in processes for submitting documentation to the agencies, and changes in information requirements. No matter how effective you might believe that your compliance processes and procedures are, they could very possibly be flawed because they are based upon requirements that have changed or no longer existent policies.
Export Solutions Inc. has been assisting clients for 11 years to draft, implement and update Export Management Compliance Programs (EMCP) tailored to and for their companies. Through its Outreach Program, Export Solutions advises client of regulatory and export policy changes, often advising Clients to update sections of their EMCP affected by the changes. Many of our Clients aggressively and diligently attempt to ensure that the export compliance procedures in their EMCP are current and accurate.
So the question is - How current is your Compliance Manual and Compliance Procedures? If you are unsure, begin your review or contact Export Solutions for a free consultation to assist you in that review. Unfortunately, we can’t assist with your fashion make-over.
Jim McShane is a Sr. Consultant, Trade Compliance for Export Solutions -- a full-service consulting firm specializing in ITAR and EAR regulations.