Businesses and Unraveling Export Controls, Trade Sanctions

On this episode of Bracewell Sidebar, presenters Matthew Nielsen and Phil Bezanson discuss US export controls and sanctions with Matt Bell. Listen to the podcast below.

Matt is the Senior Managing Director and Global Head of Export Controls, Sanctions and Trade Practices for FTI Consulting. Prior to joining FTI, Matt spent most of his career in executive legal and compliance positions with large multinational companies in the telecommunications and energy industries. He helped companies set up first-class compliance programs, which are often under intense government control, be it through civil or criminal investigations or government-mandated audits and monitoring.

What do the terms “export control” and “sanctions” mean? How are they different?

Export control is the control of goods, software and technology from a national and international security point of view. Basically, we don’t want this good software technology to fall into the wrong hands. They are based on international regimes, mainly in the United States. There are four international agreements that regulate different parts of export control.

Export controls are primarily a multilateral control mechanism – a big difference to sanctions. While sanctions are more about preventing a country, a legal person or an individual from accessing US capital markets, US businesses, US products and services for the purposes of the US, for reasons of foreign policy or for reasons of national security. For example we don’t like a certain activity or we don’t like a certain regime and how it worked or more often we have seen it applied to human rights abuses and we want to condemn this behavior with more than words, a proclamation from Congress or an executive statement that we do not approve of this. From a foreign policy point of view, we attach fines or financial losses to this.

Let’s talk a little about the trends you see. Obviously, each time the administration changes, the enforcement priority usually changes, but talk a little about what to expect from the Biden administration on these issues.

This area of ​​export controls and sanctions, and where it was trending under Trump and where it has gone with Biden, are pretty much aligned. This is an area where the administration has not changed massively. There is still a high and intense focus of all agencies on China relations and the level of technology and products that we want in China. What level of business engagement do we want in the US? It may just be a different nuance in how they used the tools at their disposal. Trump has been very focused on tariffs and got someone to pay more money to get these products into the country, or pay a fine that way, while Biden has tried more to come up with a multilateral deal on what to do with China happens and how we are going to approach it.

Let’s move on to what may be a more difficult topic for those who have not seen it face to face. Maybe let’s focus on the hypothetical energy company, and how would export controls affect a company that says, “Look, I don’t sell to North Korea or Iran or any bad guys. What do I have to worry about?”

In one of my previous roles, changing that perception was crucial. I went to the training and just said to people, “Hey, we work here at this energy company, this oilfield company. I know most of you guys think we just work with fools, as they call it in the oil field, and we do put it in a hole, we’re going to get oil and gas out, and that’s not a big deal. But how many of you think we’re selling items that are used in chemical weapons? ” Nobody in the room raised their hands. When we started going through some of the chemicals used, be it in the hydraulic fracturing process or any other process in the company that are precursors to sarin gas or mustard gas or whatever, they started to see it. The Chemical Weapons Convention contains a whole list of chemicals that are prohibited for these reasons. We’re using it for a very, perhaps benign, cause in the oilfield sector. But if you take that and mix it with some other things in the right process, you get a very bad chemical weapon. That is why it is controlled.

https://www.natlawreview.com/article/unraveling-export-controls-and-trade-sanctions-what-businesses-need-to-know