Export Compliance for Canadian Companies CITT Webinar Series Date: - - PowerPoint PPT Presentation

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Export Compliance for Canadian Companies CITT Webinar Series Date: - - PowerPoint PPT Presentation

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supply chain & logistics Export Compliance for Canadian Companies CITT Webinar Series Date: Wednesday, October 19 2016 Time: 12pm EST Hosted by: Kevin Riddell, CCLP Presenter Info Kevin Riddell, CCLP Director, International

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supply chain & logistics

Export Compliance for Canadian Companies

CITT Webinar Series Date: Wednesday, October 19 2016 Time: 12pm EST Hosted by: Kevin Riddell, CCLP

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Presenter Info

  • Kevin Riddell, CCLP
  • Director, International Logistics
  • Tremco Incorporated:

http://www.tremcoinc.com/

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Agenda

  • Canadian export controls
  • US Extraterritorial concerns
  • It’s not just “exports”
  • Automation
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Canadian Export Controls

  • Export and Import Permits Act
  • Economic sanctions
  • Defense controls
  • Other government agencies
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Export and Import Permits Act

  • Primary source of Canadian controls
  • 2 key considerations:

– Export Control list (what?) – Area Control list (where?)

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Export Control List

  • Comprehensive list of goods controlled for export
  • Controls for various reasons:

– Multilateral agreements (Wassenaar, Australia Group…) – Canada specific controls – Partnership with US

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Export Control List

  • What’s in it? (a lot)
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Export Control List

  • US origin goods special note
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Export Control List

  • US origin goods GEP-12 good news
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Export Control List

  • US origin goods GEP-12 bad news
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Area Control List

  • Whose on it?
  • What does it mean?
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Penalty Examples

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Best Practices

  • Check all of your products against the Export Control List
  • Pay special attention to 5400 US origin rule
  • Know the Area Control List
  • Have formal processes documented
  • Implement controls on affected products – automate if

possible

  • Get executive buy in
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Canadian Economic Sanctions

  • UN driven sanctions (United Nations Act)
  • Autonomous sanctions (Special Economic Measures

Act)

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Canadian Economic Sanctions

  • 3 primary groupings:

– Where (though less severe than US embargos) – What (i.e. Arms) – Who

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Canadian Economic Sanctions

  • Entity sanctions
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Penalty Example

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Penalty Example?

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Best Practices

  • Know the sanctions (Education)
  • Review your products against any product specific rules
  • Automate your entity screening
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Other government agencies

  • Guidance from Global Affairs Canada:
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Penalty Example

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Best Practices

  • Research possible risk – what agencies control your

products?

  • Education and networking are essential – get out there!
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US Extraterritorial Concerns

  • Export Administration Regulations
  • ITAR
  • Department of Treasury OFAC
  • Don’t forget FEMA!
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Export Administration Regulations (EAR)

  • 15 CFR
  • Main source of export control in commerce (“dual use”)
  • Governs not just US exports, but exports of US goods or

by US technology

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Export Administration Regulations (EAR)

  • Read the General Prohibitions Carefully! (15 CFR 736)
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Penalty Example

  • Read This!
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Penalty Example

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Penalty Example

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EAR Office of Antiboycott

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ITAR

  • US Military Goods Controls
  • Not as wide ranging as EAR – specific to military

purpose goods

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Department of Treasury OFAC

  • Primary source of economic sanction for US government
  • Application can be extraterritorial
  • Can deny ALL activity with listed entity or country
  • 2 main areas to review:

– Countries – Entities (“SDN”s)

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Department of Treasury OFAC

  • Application concerns
  • “US Person” (Example below is 31 CFR 560)
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Department of Treasury OFAC

  • Country concerns
  • Some countries are “off limits” i.e. North Korea – don’t

even send a greeting card!

  • Some countries are similar to Canada and only certain

items are controlled

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Department of Treasury OFAC

  • Entity concerns – Specially Designated Nationals
  • This is where it gets tricky
  • A transaction with a listed entity can be forbidden,

wherever they are

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Penalty Example

  • SDN Example
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Penalty Example

  • Canadian example
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Don’t forget FEMA!

  • Little known
  • Forbids Canadian companies from refusing to do

business with Cuba if directive came from US parent

  • New development related to Buy American
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2 FEMA Orders

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Penalty Example

  • None and lets hope this goes away! Puts Canadian

subsidiaries in an impossible position

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Best Practices

  • Know the US rules – BIS offers great free training

sessions

  • Implement controls on movement of affected items –

automation is ideal

  • Automation for entity screening is a must
  • Educate your Canadian employees and get executive

buy in

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It’s Not Just “Exports”

  • Diversion
  • “Deemed Export” rules
  • Sanctioned parties in country
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Diversion

  • What is your customer doing with your goods?
  • More of a US concern (for now…)
  • Good idea to follow US “Red flags” advice
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Diversion

  • Could Canada be adopting similar rules?
  • Two recent quotes from news coverage of Streit story:

“A parliamentary committee is preparing to take a hard look at the export controls Canada places on foreign sales of military goods and whether sanctions and embargoes meant to stop arms shipments by Canadians have sufficient teeth” “the armoured vehicles were manufactured and shipped by the company's branch in the United Arab Emirates, and therefore the sale is outside of the federal government's arms export regulatory regime”

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Deemed Export Rules

  • Delivery of technology and information related to

controlled products

  • Canada and US both control technology transfers
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Sanctioned Parties in country

  • Common misconception that “sanctioned parties” are all

foreign:

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Sanctioned Parties in country

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Best Practices

  • Implement a “red flags” education program
  • Verify if any of your technology is controlled
  • Screen ALL business partners, not just your exports

(don’t rely on “my freight forwarder checks that”)

  • Automate…
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Automation

  • Compliance with some of the above requires automation
  • SPL in particular cannot be handled manually
  • Licenses and permits can be managed manually, but

risky

  • Many options: from low cost, on demand, to high cost

local installation

  • Can also act as catalyst for internal

review/improvements

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Best Practices

  • Find the system option that fits your business (not the
  • ther way around)
  • Review all the options
  • Don’t let it be an “IT project” – it’s a “compliance project!”
  • Use the project as chance to close any existing business

gaps

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Conclusion

  • Some common themes:

– Automate! – Know the rules! – Educate your employees! – Document your processes! – Get executive buy in!

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Links to referenced articles

  • Slide # 12 http://www.cbc.ca/news/canada/montreal/iran-illegal-exporting-canada-railway-train-equipment-1.3268414
  • Slide # 17a http://www.theglobeandmail.com/report-on-business/international-business/african-and-mideast-business/rcmp-

charges-alberta-company-over-illegal-shipment-to-iran/article17959104/

  • Slide # 17b http://www.blg.com/en/newsandpublications/publication_3745
  • Slide # 18 http://www.cbc.ca/news/politics/streit-un-arms-report-sudan-1.3758670
  • Slide # 21 http://www.surreyleader.com/news/200097481.html
  • (All other images from public government web sites)
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Q&A

Feel free to contact me: kriddell@tremco.ca https://ca.linkedin.com/in/kevinriddellcclp https://twitter.com/kngriddell

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Register for the full program, or individual sessions. Watch live, or access the recordings as often as you like until October 2017. Current State of Transportation panel is FREE for CCLP & CITT Students (registration still required to receive login info!) To see the full schedule, learn more or sign up now, visit:

www.citt.ca/conferencewebcast