Export Controls: Compliance and Enforcement Activities and Congressional Notification Requirements under Country-Based License Exemptions

Some compliance activities for the export of controlled items under State and Commerce licenses differ from compliance activities under country-based license exemptions, but enforcement activities are generally the same. Compliance activities provide information for exporters, licensing officials, and enforcement agencies to help assess the validity of export transactions, identify potential violations, or prevent violations before they occur. Of the seven compliance activities we identified, three differ for licensed exports compared with country-based license exemptions. These activities are (1) license application review, (2) vetting parties to transactions, and (3) compliance program reviews (recordkeeping). In contrast to these compliance activities, the other four compliance and three enforcement activities, such as inspection of exports, investigations, and punitive actions for violations, are generally the same for both licensed exports and country-based, license-exempt exports. The congressional notification requirements for State and Commerce to report proposed exports and statutory violations vary because each agency's authority stems from different legislative statutes. Specifically, each agency's export control regulations derive from different legislative authorities and aim to control articles that have different levels of concern for diversion or unintended use. State is required by law to notify Congress of proposed exports of major defense equipment, articles, and services that meet specific dollar thresholds under a license or treaty. Commerce is required to notify Congress of proposed exports that are destined for a designated state sponsor of terrorism or could make a significant contribution to the military potential of the government of a country that has repeatedly provided support for acts of international terrorism. However, in June 2012, Commerce issued a proposed rule that would add a new requirement to notify Congress of pending exports of major defense equipment, such as articles under the proposed 600 series, including those exported under the STA, that meet the same dollar thresholds as those required of State. As of November 2012, Commerce was considering how to implement its proposal. In terms of enforcement actions, State is required to notify Congress of certain violations of export laws. Commerce is required to provide an annual report to Congress that includes statutory violations resulting in administrative and criminal penalties.