978-1285427041 Chapter 13

Unlock access to all the studying documents.

View Full Document

CHAPTER 13

THE REGULATION OF EXPORTS

CASES IN THIS CHAPTER

United States v. Mandel

United States v. Chmilewski

Briggs & Stratton Corp. v. Baldridge

United States v. Zhi Yong Guo

Freedom to Travel Campaign v. Newcomb

TEACHING SUMMARY

Just as countries control the import of goods, they also control the export of goods from their

country. Whereas the former primarily focuses on the protection of a domestic industry (and

sometimes the health, safety, or morals of citizens), the latter typically focuses on preventing the

certain technologies and items (such as weapons) from falling into foreign hands. There are

national security issues with many such controls. Keeping a competitive edge in new

technology, even if not typically usable by foreign militaries or anti-U.S. terrorists, also

constitutes a reason for imposing selected controls. Sometimes too a country also seeks to

protect scarce or important resources as Russian minerals or Japanese rice.

1. What were the reasons for control in this case?

2. What might have been the broader implications, beyond this case, if the court had

allowed the defendant access to the Secretary’s records? Could it have an impact on

national security?

3. If different judges had different opinions as to what goods may or may not be exported

without a license, what would be the result?

permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

Chapter 13: The Regulation of Exports

United States v. Chmilewski

1. Imagine that you have a foreign customer who balks at your price, but then suggests

that you send two invoices—one for them to submit to their customs authorities for far

less than the agreed price of the goods, and a second for them to actually pay. How

should you reply?

2. You apply for, and receive, an export license for a shipment to a foreign customer. After

shipment, the customer places a new order for the same merchandise. May you use the

license number and information from the first shipment and enter it on EEI for the

second shipment? Why or why not?

1. What is the purpose of the antiboycott regulations?

2. On what basis did the company challenge the act and regulations?

3. How should a company respond to a questionnaire like the one Briggs received here?

What action should it take?

1. From the limited facts presented here, do you think a reasonable juror could conclude

that the defendant knew his conduct was illegal? Why or why not?

2. In addition to penalties faced during the sentencing in this case, what administrative or

civil penalties did the defendant face?

Chapter 13: The Regulation of Exports

Freedom to Travel Campaign v. Newcomb

1. What was the purpose underlying the ban on travel to Cuba?

2. What was the legal standard for determining whether the U.S. government can restrict

international travel?

3. Why was the prohibition on travel not “void for vagueness”?

4. Consider the five cases in the chapter. Can you draw any general conclusions about the

relationship between the individual and government with regard to the regulation of

imports, exports, international travel, and even international commerce?

Answer: This question calls for student opinion.

ANSWERS TO CASE PROBLEMS

1. Answer: The International Emergency Economic Powers Act (IEEPA) clearly covers

The court interpreted IEEPA broadly to include activities beyond commercial or

2. Answer: According to the Export Administration Act as renewed through annual

presidential determination, good and technology do have nationality as their exportation and re-

Chapter 13: The Regulation of Exports

3. Answer: This question calls for an opinion.

4. Answer: When technology is shown to (read by) or discussed by (heard by) a foreign

national, it becomes a deemed export. A deemed export requires a license.

The U.S. government deemed Bernstein’s program an export of U.S.-technical data or fearing

5. Answer: The U.S. government deemed Bernstein’s program an export of U.S.-technical

data or fearing national security/computer security ramifications. The U.S. regulates the export

of technical data, i.e., technical information about a process that is not available to the general

7. Answer: Yes, an electric cattle prod, because it also has other possible uses (law

8. Answer: The Bureau of Industry and Security of the U.S. Department of Commerce

exports.

9. Answer: Legislation to rewrite and reauthorize the Export Administration Act as set forth

in the Export Administration Act of 2007 (S. 2000) had not been adopted by the U.S. Congress

Chapter 13: The Regulation of Exports

at the time of the preparation of the instructors’ manual. The export controls imposed by the

MANAGERIAL IMPLICATIONS

The technical information sought to be disclosed may require an export license pursuant to the

concept of deemed exported. Deemed exported is the communication or other transfer of

technology, technical data, software, encryption technology, computer source code or any other

controlled information to a foreign national. As such, the exporter must carefully adhere to the

steps regarding the export licensing determination.

Subsequent sanctions preventing the issuance of license may be non-actionable assuming they

conform to the Export Administration Regulations or were lawfully adopted pursuant to IEEPA.

This fact pattern presents a very similar situation to that presented in the Dresser Industries case

discussed on page 360. In that case, President Reagan utilized U.S. export control laws to order

all American-owned companies and subsidiaries worldwide from exporting goods or technology

for use in the Soviet natural gas pipeline project. The ban included U.S. origin goods and

technology as well as those based on U.S. patents and technology. States negatively affected by

the export ban retaliated by prohibiting their companies from complying with the order. Dresser

France, S.A. was faced with the possibility of sanctions under U.S. law or the risk of

nationalization by the French government. Ultimately, the Reagan administration’s attempt to

assert extraterritorial jurisdiction of U.S. export controls failed, and the prohibitions were eventually

rescinded.

ETHICAL CONSIDERATIONS_______________________________________________

1. One needs to be aware of the Antiboycott regulations, which include an obligation

to report inquiries to the U.S. government. If you have reason to know about diversion of any

controlled item, you must report this to the government.

2. Students should take into account a variety of considerations. Businesses

constantly lobby for changes in the law, so the mere fact of lobbying is not necessarily

contrary to the public interest. The primary risk is one of public perception: will your

company look (and be) essentially self-serving, sacrificing the public interest for private

gain? Many companies seem willing to ask for just such sacrifices. In the international

context, the playing field is somewhat different, since U.S. controls alone (even very

effective ones) will not guarantee that dual use items and other military application

technologies will not proliferate to unreliable regimes and terrorists.

The recurring ethical problem is that many companies claim that no regulations are

justified since non-U.S. companies will rush into the market breach created by U.S.

controls, and that since someone else will do it, “It might as well be a U.S. company.”

Perhaps Enzyme, Inc. could lobby for and support stronger international efforts to control

the issuance of export licenses for biological and chemical agents with potential military

uses.