If an American in New York forwards the formulation of a corrosion inhibitor containing a nanomaterial to a Canadian co-worker in California, this may be regarded as an export to Canada.
Table 1. U.S. Legislation and Regulations Related to Export Activities
Tap on the table to open a larger version in your browser.
The global economy and new technologies, such as nanotechnology, have created a number of product stewardship challenges for industrial hygienists. IHs evaluate and then develop and implement programs to protect employees. Because of their technical knowledge, IHs are commonly involved in nanomaterial stewardship activities including those ensuring compliance with United States and international product safety regulations.
Businesses must fully understand the health, safety, and environmental implications of nanotechnology and how they impact business decisions. Often these responsibilities involve a certified industrial hygienist because he or she has no potential conflict of interest, as opposed to a manager or executive whose compensation may be tied to sales or profit margins.
However, product stewardship goes beyond health, safety, and environmental requirements. It also involves ensuring products are being utilized by customers for their designated uses and other legitimate purposes. Nanotechnology regulatory compliance begins with proper product classification. That classification determines which national and international regulations apply. Nanomaterials, for example, can be utilized as chemicals, pesticides/antimicrobials, food, drugs, or cosmetics, or in a variety of devices.
Nanotechnology also has implications for national security. According to the Department of Commerce’s Bureau of Industry and Security (BIS), nanotechnology is targeted for theft from U.S. entities via export activities. The dangers of illicit technology transfers via export and import activities include proliferation of weapons of mass destruction, acts of terrorism, industrial espionage, and adverse impacts to the U.S. economy due to the loss of proprietary research and development information. In August 2015, the Department of Justice published the “Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret and Embargo Related Criminal Cases,” which details multiple thefts of high-tech carbon fibers from U.S. companies to sell in China and Iran and the thefts of trade secrets related to aerospace-grade titanium, titanium dioxide production, and surface coatings. For example, in one case, a research chemist from a U.S. chemical company accepted a position at a university department of nanotechnology in China and attempted to transfer trade secret information from his former employer to his academic office. The report also briefly overviews export security regulations that affect nanomaterials and recommended practices and resources related to compliance. Applicability of export regulations to nanomaterials depends on their end use.
Four primary U.S. agencies—the Departments of State, Commerce, Treasury, and Homeland Security—regulate the export of American goods and services, including technology. The term “technology” includes nanotechnology and nanomaterials. Table 1, based on information from the BIS website, summarizes related U.S. legislation, administering agencies, and corresponding regulatory citations.
U.S. EXPORT REGIMES
Table 2. Compliance Resources for Export Activities
Tap on the table to open a larger version in your browser.
RECOMMENDED PRACTICES FOR EMPLOYERS
To avoid loss of export privileges and costly fines, companies must develop and implement compliance policies. The key component of a successful compliance program is management commitment. Management must devote adequate resources to its export programs. Written policies must define the responsibilities of people involved in export activities. This includes appointing program champions who stay current on applicable regulations and train others. Due to the technical nature of nanomaterials, ethical/conflict of interest reasons, and complexity of applicable regulations, one of the export champions will likely be a certified IH. Nanomaterials can be regulated as “technology” under U.S. export regimes. Therefore, it is imperative to stay abreast of pertinent regulatory changes.
The easiest way to develop export compliance procedures is to begin by assembling a multidisciplinary team to map out existing product ordering and shipping processes in flow charts, listing associated documentation. The team should include applicable stakeholders including legal, product safety, sales/customer service, purchasing, and shipping personnel. Screening of employees, customers, visitors, contractors, transactions, and products is an important control measure. Screening software programs expedite this process and also track updates to the various BIS, OFAC, and State Department lists. Self-audits are important to ensure compliance. Last, there must be internal procedures in place to report possible export violations and implement corrective actions.
COMPLIANCE ASSISTANCE
The U.S. government offers a number of free or low-cost resources to American businesses wishing to export goods. Table 2 describes the compliance assistance and training offered by government agencies.
Nanotechnology is a rapidly changing field with significant health, safety, environmental, and product stewardship considerations. The export of nanomaterials presents additional global product stewardship challenges. These challenges require the cooperation of several departments within a business organization. IHs contribute technical, ethical, and critical thinking skills to global business teams.
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C.R. KNEZEVICH, CIH,
is an industrial hygienist with the U.S. Air Force. She can be reached at (912) 704-1383 or via email
.
Author’s note: This article is based on my previous work experience in the chemical industry. It does not reflect the opinions of the U.S. Department of Defense or the U.S. Air Force.
RED FLAGS for Potential Customers
The following questions can help exporters determine whether a potential customer has any “red flags” (suspicious characteristics) that might draw scrutiny from U.S. authorities:
- Is the customer paying cash for the export?
- Is the customer’s name similar to a name on the BIS’ Denied Persons List?
- Is the purchase not in line with the customer’s reported line of business? (For example, a small clothing manufacturer wants to purchase a large number of sophisticated computers.)
- Is the customer vague on the use of the product? (For example, a broker from an overseas country wants one container of a nano-metal powder, but doesn’t specify the final use of the product or give his or her customers’ general line of business.)
- Is the customer declining typical installation, maintenance, or delivery services?
RESOURCES
Department of Commerce: A Basic Guide to Exporting
, 11th edition (May 2015).Department of Commerce, Bureau of Industry and Security: Essentials of Export Control, Modules 1–6
.
Department of Commerce, Bureau of Industry and Security: NOAA Export Workshop on U.S. Export Controls, June 7–9, 2011, and June 28–30, 2011.
Department of Commerce, Bureau of Industry and Security, Office of Exporter Services, Export Management and Compliance Division:
Compliance Guidelines: How to Develop an Effective Export Management and Compliance Program and Manual
(November 2013).
Department of Justice:
Summary of Major U.S. Export Enforcement, Economic Espionage, Trade Secret and Embargo Related Criminal Cases
(January 2009 to the present: updated August 12, 2015) (PDF
, February 2017).
Export.gov:
Consolidated Screening List
.Federal Register
: Department of Treasury, Office of Foreign Assets Control, Economic Sanctions Enforcement Guidelines (PDF
, November 2009).
Wassenaar Arrangement Secretariat:
The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies
(PDF
, February 2017). EXPORT REQUIREMENTS
The Export Administration Act of 1979 provides legal authority to the president to control U.S. exports for reasons of national security, foreign policy, or shortage. The Department of Commerce’s BIS administers the Export Administration Regulations (EAR) with assistance from Customs and Border Protection. EAR applies to “dual-use goods and technologies” or items that have a commercial application but can also be utilized for military, terrorist, or weapons of mass destruction uses. By contrast, defense goods and services are regulated under the International Traffic in Arms Regulations (ITAR).
The definition of an export is very broad under EAR and ITAR. An export is the actual shipment or transmission of items out of the United States; this includes intellectual assets like emails, information transmitted verbally, and the release of technology or source code subject to EAR to foreign nationals in the U.S. The definition also covers “re-exports,” a term that refers to the actual shipment or transmission of items from one foreign country to another. For example, if an American in New York forwards the formulation of a corrosion inhibitor containing a nanomaterial to a Canadian co-worker in California, this may be regarded as an export to Canada. If the same American forwards the same information to a co-worker in California who is a U.S. citizen, a permanent resident foreign national (that is, a person with a “green card”), a political refugee, or someone granted political asylum, the information transfer is not an export. Materials exempted from the EAR definition of “export” include nontechnical publications, publicly available nonencrypted software, foreign-made items with less than a de minimis percentage of a controlled U.S. content, and items regulated by other agencies such as the Nuclear Regulatory Commission.
How “export” is defined can greatly impact product safety-related communication within an international company. For example, an American product safety specialist may not be able to share the product formulation of a technology to a co-worker in Russia, China, or other countries determined by the Departments of Commerce, State, or Treasury to be impermissible recipients. Legal counsel is essential for compliance. An industrial hygienist involved in product stewardship is part of a companywide team also comprising legal, sales, customer service, and shipping personnel to ensure export compliance.
An exporter shipping EAR-regulated goods must first classify the products per the Commerce Control List (CCL) using Export Control Classification Numbers (ECCN) and determine the shipping destination. The ECCN system is an alphanumeric code that specifies to which of 10 categories and five product groups the product belongs. The CCL groups countries into various categories based on criteria of bilateral relations (that is, international agreements) and security. The BIS has established licensing requirements for CCL-listed items. Most commercial goods are items not specified on the CCL; these are designated “EAR 99” and do not require a license.
U.S. exports are prohibited to certain destinations. The U.S. has placed trade embargos against a list of Countries of Concern, which includes North Korea, Iran, and Syria. The reason for an embargo or export restriction may not be related to global terrorism; it may be related to human rights violations or drug trafficking.
Prior to an export, the exporter must screen all parties involved in the transition to ensure that there are no prohibited end users or prohibited end uses (activities) taking place. Prohibited end uses include nuclear proliferation, missile technology, and chemical and biological weapons. (See the
sidebar
below for information about “red flags” that exporters must look for in their potential customers.) The BIS, State Department, and the Treasury’s Office of Foreign Assets Control (OFAC) publish various lists that exporters utilize to verify that a potential customer is not a prohibited end user. For example, BIS maintains a Denied Persons List of individuals whose authorization to export has been suspended or revoked. The State Department issues a List of Global Terrorists, which is updated via the Federal Register
. A Consolidated Screening List is available at Export.gov
.
Civil penalties for EAR and OFAC violations are $250,000 per violation or five times the value of the goods exported, whichever is greater. In addition, the goods can be seized, and the shipper can lose export privileges.
The U.S. also works with its allies to develop mutually agreed-to export requirements. The Wassenaar Arrangement on Export Controls for Conventional Arms and Dual-Use Goods and Technologies is a multilateral export control regime with 41 participating countries, including many of the former Warsaw Pact or Eastern Bloc countries. The regulation of nanotechnology is a matter of international discussion.
Where Product Stewardship Meets
Global Commerce and National Security
A New Role for IH
Export Compliance:
