Companies must also make sure they do not ship goods to sanctioned or
embargoed countries. This seems straightforward, but many companies fail
to grasp how these regulations actually work. If a company is U.S. owned, it
must comply with U.S. embargoes and sanctions. For example, that means
that, with few exceptions, a U.S. company with operations in Canada can’t
ship goods to Cuba because the U.S. has an embargo on Cuba.Checking restricted parties lists and embargoed countries might not sound
so bad until you consider scale. Many companies are shipping thousands
of orders a day to dozens of different countries, and there are more than
50 restricted parties lists around the world. Checking those orders against
all those lists can quickly become a logistical nightmare. However, there are
ways to smooth the process by automating it (see the last section in this
chapter for details).Obtaining the right export licenses .................................................
Exporters must also track whether a product needs an export license, which
is required for certain classes of goods, such as firearms, advanced technol-
ogy, and medical devices. These products are called controlled goods. How
do you know whether you need an export license? In the U.S., you find
out through the Commerce Department’s Web site (www.bis.doc.gov/
licensing/exportingbasics.htm). Using this site, you can find out
whether the item you are trying to export has an Export Control Classification
Number (ECCN), which means you need a license to export that item. Items
that are not controlled fall under and are referred to as EAR99 or NLR (No
License Required).Chapter 8: It's a Small World: Effectively Managing Global Trade 151
The $100 million export fine
Just how serious are penalties for not complying
with global trade regulations? Try $100 million
serious. In March 2007, a prominent American
company agreed to plead guilty and pay a fine of
up to $100 million for failing to obtain the proper
export license for shipping night vision goggles
parts to China, Singapore, and Great Britain. The
company also pled guilty to leaving information
off of arms exports reports from 2000 to 2004. U.S.
Justice Department officials said the company
was willingly violating the export restrictions and
didn’t take action to stop the violations until the
department found out what was going on. The
company faced two major problems: it shipped
the wrong items and it shipped them to the
wrong destinations.