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40 MTR May 2008 As the U.S. Coast Guard increasingly relies on undersea technology and equipment to bolster port security, other U.S. government agencies continue their mission of ensuring that critical technology and equipment deployed in the war on terror do not fall into the wrong hands. Companies competing in the undersea defense space must be cognizant of all of these regulations in order to comply with the controls imposed on their products and technol- ogy. This article summarizes the key regulations in this area and highlights some of the products and technology affected. The Office of Foreign Assets Control of the U.S. Department of the Treasury (OFAC) administers trade embargoes against various countries (such as Cuba, Iran, and Sudan), entities, and individuals identified as terror- ists, supporters of terrorist governments, or otherwise as threats to U.S. national security. In most cases, these embargoes prohibit all U.S. companies, citizens and resi- dents from engaging in any direct or indirect trade or transactions with such countries, entities and individuals. Two other agencies administer most of the U.S. export control programs. The Bureau of Industry and Security of the U.S. Department of Commerce (BIS) is responsible for implementation of the Export Administration Regulations (EAR), which regulate the export of commer- cial items, technology and software. The vast majority of these products are not subject to country-based license requirements, but for those with "dual-use" capabilities, export licenses may be required (and in some cases will be denied) depending upon the intended destination of the export. However, the export of all items, technology and software subject to the EAR must be vetted for compli- ance with various end-use and end-user prohibitions and associated license requirements or denial policies. The export of defense articles and related technical data and defense services is regulated under the International Traffic in Arms Regulations (ITAR) which are enforced by the Directorate of Defense Trade Controls (DDTC) of the U.S. Department of State. Unlike in the commercial export arena, most defense trade is subject to export licensing requirements. In addition, the ITAR require- ments apply to controlled components as well as end items. Another agency whose mission includes protection of national security is the Committee on Foreign Investment in the United States (CFIUS), an inter-agency committee chaired by the U.S. Department of the Treasury. CFIUS is charged with review of foreign investment in the United States that could have an adverse impact on national secu- rity. Proposed foreign acquisitions of companies that pro- duce equipment and technology that is critical to home- land security or are key suppliers to the U.S. Government will be subjected to careful scrutiny, and foreign buyers may be required to agree to restrictions designed to pro- tect against unauthorized foreign access to such products and technology. Companies competing in the undersea defense space must be cognizant of all of these regulations in order to avoid inadvertent violations. Many companies who sell only to the U.S. government or other U.S. based cus- tomers believe that they do not export and need not con- cern themselves with export compliance. To the contrary, both the EAR and the ITAR define an export as including the release of technology to foreign nationals anywhere in the world, including in the United States. This means that companies whose products and technology are sub- ject to export controls must have in place plans designed to protect their technology against unauthorized disclo- sure to foreign nationals, including foreign national employees or customer representatives, plant visitors, U.S. Regulatory Control of Undersea Defense Technology Protecting the Technology that Protects Us By Barbara D. Linney* MTR#4 (33-48).qxd 5/13/2008 10:25 AM Page 40
