Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Export Licensing Enforcement Now Falls on Human Resources Managers.

The lives of Human Resources Managers have recently been significantly complicated by virtue of U.S. immigration authorities (USCIS) issuing the newest version of the Form I-129, Petition for a Nonimmigrant Worker. The provisions in this new form now require HR Managers to gain a whole new area of substantive knowledge – U.S. export license laws. If your company exports goods or services subject to Dept. of State or Dept. of Commerce (the two primary regulatory agencies for these purposes) regulations, then you probably already know about or have access to subject matter experts. Otherwise, welcome to a whole new and highly complex regulatory world!

This new I-129 immigration form incorporates new requirements relating to temporary work visas (H-1B, L-1, and O-1A status) entitled "Certification Regarding the Release of Controlled Technology or Technical Data to Foreign Persons in the United States." Employers are now mandated that any company filing for a temporary visa on behalf of a foreign national must certify there are no International Traffic in Arms (ITAR) or Export Administration Regulations (EAR) limitations on the release of controlled technology and/or technical data to that foreign national. Granting a foreign national access to controlled technology or technical data is considered a "deemed export" and is prohibited without first obtaining an appropriate export license. [More details about the technical meaning of these terms follows.] The burden of compliance with this certification now clearly moves from Operations, Traffic and/or Legal to rest squarely on the shoulders of Human Resources personnel.

What Are Controlled Technology and Technical Data?

"Technology" and "technical data" controlled for release to foreign nationals are identified on the Commerce Control List (CCL) and the U.S. Munitions List (USML). The Department of Commerce, Bureau of Industry and Security (BIS) administers the EAR. The Department of State’s Directorate of Defense Trade Controls (DDTC) administers the ITAR.

In the EAR, controlled technology refers to information for the development, production, or use of "dual-use" [military and civilian] products, including software. Whether technology required for the development, production, or use of items on the CCL is subject to export licensing depends on a variety of factors including the nature of the technology, and the intended destination, end-user, and end-use. Controlled technology or technical data is deemed to have been exported when it is disclosed to a foreign national, whether disclosure occurs in the United States or abroad; hence the term "deemed export."

The ITAR contains a similar analysis with regard to the disclosure of technology and technical data to a foreign national. Goods and technical data subject to control under ITAR include information required for the design, development, production, testing, or modification of defense articles. Defense services are also regulated, including the furnishing of assistance to foreign persons in the design, development, testing, or use of defense articles, whether occurring in the U.S. or elsewhere. Under the ITAR, technology/software and technical data is "released" for export through: (i) visual inspection by foreign nationals of U.S.-origin equipment and facilities; (ii) oral exchanges of information in the United States or abroad; or (iii) the application to situations abroad of personal knowledge or technical experience acquired in the United States. While not specifically mentioned in the regulations, the same forms of oral or visual release are envisioned in EAR as deemed exports.

If a license is required to export controlled technology or technical data to a specific country, that same license requirement applies equally to a foreign national of that country. However, one of the notable differences in approach between the EAR and ITAR remains what constitutes nationality. BIS looks at the current country of residence or citizenship, whereas State continues to look at country of birth and citizenship. So for HR Managers, questions about personal immigration history may now become critical.

Regardless of which agency has jurisdiction, a license will be required for North Korean, Cuban, Iranian, Syrian, and Sudanese nationals. Furthermore, the EAR mass-market standard (symmetrical key length greater than 64 bits) remains. Put another way, for purpose of illustration, it is permissible to allow a foreign national access to Oracle software for use at his or her desktop. However, if that foreign national is given access to the source code, perhaps to fix a bug, that possibility needs to be carefully reviewed to make sure an export license is in place prior to disclosure.

Further, HR Managers should keep in mind the U.S. maintains some form of embargo against Burma/ Myanmar, Belarus, China, Cote d’Ivoire, Cuba, Cypress, Democratic Republic of Congo, Eritrea, Haiti, Iran, Iraq, Lebanon, Liberia, Libya, North Korea, Sierra Leone, Somalia, Sri Lanka, Sudan, Syria, Venezuela, Vietnam, Yemen, and Zimbabwe, so persons from those countries present potentially greater hurdles when it comes to export license approvals.

How Should HR Managers Address These Issues?

HR Managers are advised to work with in-house and external export staff and international trade counsel, along with immigration counsel, in order to develop compliance procedures. These compliance efforts include a review of relevant job descriptions that potentially expose foreign national employees to controlled technology and/or technical data. All potentially relevant technology and technical data should be cross-referenced against BIS’ Commerce Control List (CCL) and State’s U.S. Munitions List (USML). In this context, additional analysis of an individual employee’s residence history may also be appropriate. If an export license is required before certain technology or technical data may be released to a foreign-national employee, HR Managers will be at the forefront of ensuring compliance with the I-129 certification attesting to the worker not being exposed to that covered technology or technical data without the employer first obtaining the required export license.

Export classifications and licensing determinations can be a complex area of law. MSK International Trade and Immigration Attorneys regularly work side-by-side to advise clients about appropriate procedures for maximizing compliance.

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