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Understanding the Risks of Catch-All Export Controls

There are multiple regulatory aspects that traders need to comply with, this article walks you through the steps you need to mitigate risk.

Export controls are an integral part of international trade. Importers and exporters must comply with all rules and regulations in order to avoid being penalized. However, dissecting the various regulations related to export controls is not a straightforward task. This is because the interpretation of terms can vary from one region to another. Since the 1990s, the US has implemented export rules known as catch-all controls. The primary objective of these regulations is to keep an eye on components related to missiles and weapons of mass destruction. This blog discusses the risk of catch-all export controls.

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New Advisory Issued by the US

In September 2020, the US government issued a new advisory related to North Korea’s ballistic missile procurement. According to the advisory, traders must be cautious about exporting certain products since they can be used for unlawful activities in North Korea. This advisory covers manufacturers, traders, financial institutions, and logistics firms. The advisory notes that elements in North Korea are aiming to procure basic commercial components from abroad in order to use them for missile development.

As per the advisory, North Korean entities are trying to procure potentially dangerous materials without revealing their actual end-use. These activities are being executed by means of mislabelling products and concealing facts. Therefore, the US government wants exporters to be cautious while exporting products to different parts of the world. However, this advisory has ignited a new debate surrounding catch-all export controls.

The Risks Related to Catch-All Export Controls

Although the catch-all export controls were originally used in the US, they have now been implemented by several other countries around the world. The catch-all export controls require traders to obtain special authorizations for exporting products that are not usually subjected to export control laws. The key aspect here is that the end-use of the product should not pertain to missiles or weapons of mass destruction. Some of the products covered under these regulations are heavy vehicles, metals, winding equipment, carbon fiber, and propellants.

This means that traders must be extremely careful while exporting these types of products. Even if they are not aware of any potential misuse by the end-user, they can be held liable for engaging in unlawful activities. The purview of catch-all export controls is fairly vast, and traders need to adhere to the guidelines if they want to avoid getting into trouble. In fact, all parties engaged in international trade must pay attention to the products that they are exporting and the counterparties that they are dealing with. This is the only way to minimize the risks associated with catch-all export controls.

Conclusion

In conclusion, it is evident that there are multiple regulatory aspects that traders need to comply with. If you need external assistance related to your trade compliance program, there are various trade management firms active in the market. One such firm is OCR Trade Management. Our export 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.