A Little Something Different – Let’s Talk About Legal and Compliance, Part 2

Does Santa Violate Export Control Laws Every December?

Before we can answer that highly seasonal question, we should probably start with “What are export control laws anyway?”. Even before that, I should mention that this publication is not legal advice, and it should not be relied upon as such. If you find that this discussion raises some questions for you, I encourage you to seek legal counsel. So, what are export control laws? Many countries, including the United States, have laws that dictate the process for exporting certain products, materials, software, and technology to foreign end users. Most countries have also special subsets of these laws regarding the export of weapons, military, and space launch items.

Since I believe the North Pole is a self-governing land (like a colder, snowier Luxembourg), we can’t say for sure whether it has any export control laws to speak of. However, since I doubt that I’ll get credit for writing a blog this short, humor me and let’s assume that the North Pole has laws that mirror the USA.

The United States has two primary bodies of export law, the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR). Unless little Timmy is writing to Santa asking for something like:

“Rockets, SLVs, and missiles capable of delivering at least a 500-kg payload to a range of at least 300 km” – USML Cat IV (a)(1)

or

“Naval nuclear propulsion plants and prototypes, and special facilities for construction, support, and maintenance therefor” – USML Cat VI(e)

we can probably skip over ITAR and focus our discussion on EAR, which covers many, many specifically enumerated items and technology but also has a catch-all category known as EAR99, which covers pretty much everything not specifically called out in the Commerce Control List, which is a list of items, materials, software, and technology, all of which has specific restrictions based on where the item is headed and what it is being used for. If little Timmy is indeed building his wish list off the USML (the list by which items are determined to fall under ITAR restriction) then someone should probably have a little talk with him.

The good news is that pretty much everything in Santa’s sleigh should fall nicely into the catch-all EAR99 category unless he’s hauling around a drone, or an advanced 3-D printer.

Now here is where in our little hypothetical Santa might be getting himself into trouble: Just because a product is EAR99, DOES NOT mean there are no restrictions on its export. For example, the US Government has its own version of “the naughty list”. These select few countries either cannot be exported to at all or carry special destination country-specific rules, that would require the exporter to seek a license from the U.S. Commerce Department prior to shipment. As recently as 2022, the US has expanded its Foreign Direct Product Rules, which state that the US Government can exert its reach over products made outside the US using US-sourced technology.

As an exporter, best practices dictate that a foreign end user supply information about the proposed end use meaning what they will do, (and promise not to do) with the exported products or technology. A quality End-User Statement or End-Use Certificate includes detailed information about how the item/technology to be exported will be used, and importantly in some of those countries I mentioned above, how it will not be used.

My kids’ Christmas lists are just lists - they didn’t provide detailed end-use information about how their makeup kits, art sets, and unicorn stuffy will be used or potentially re-exported. Accordingly, I don’t think the average Christmas list would be considered a compliant End User Statement for the purpose of ensuring FDPR and overall EAR compliance.

Maybe Santa should consider hiring a few “compliance elves” at the North Pole, just in case.

Thanks for reading and Happy Holidays from Concepts NREC!

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