US export controls allow traders to export and re-export goods to China without requiring any additional US governmental licenses. However, if products being exported include items that are manufactured in the US, then you may be required to obtain certain additional permissions. Similarly, there are a list of entities in China that are prohibited from receiving any sensitive items from the US. Most of these entities are associated with the Chinese government.
The key idea behind these regulations is that the US wants to protect its military-use equipment at all costs. Further, the EAR also covers military-related technologies as well. For instance, if you are exporting technology to China, and it could have end-use for the Chinese military, then you need to be extremely careful. Traders must know the different types of product and technology categories that are covered under the EAR so that they can avoid penalties and fines.
Violations related to export control laws and the EAR can result in penalties of up to $250,000 per violation. This is a significant sum that can have an adverse impact on any trader, small or large. In addition to this, traders who willingly or unwillingly export sensitive items to China without meeting the regulatory aspects can be jailed for up to 20 years. They can also have their trading licenses revoked permanently. In order to avoid these situations, it is advisable to utilize industry experts to ensure full compliance for all transactions with Chinese partners.
Due to recent events, this topic has assumed even greater significance as tensions between the US and China have been escalating. The two countries have been engaged in a full-scale trade war, placing sanctions on products sourced from each other. Therefore, traders need to be even more careful in order to avoid a risky situation.
In conclusion, compliance with EAR is paramount. If your company needs assistance with your trade compliance program, our global trade management software makes sure that your business is fully compliant with all trade regulations. For more information about our global trade management software offerings, please contact us.