RF Micro Devices Inc. felt the sting of the federal government's export control laws in August when the semiconductor components manufacturer agreed to pay $190,000 for allegedly shipping modems to China without a license.
The Greensboro, N.C., company provides technologies for wireless communications devices used in various industries, including aerospace and defense. The Commerce Department's Bureau of Industry and Security (BIS) cited the manufacturer for knowingly exporting the unlicensed products on 14 occasions.
The company is one of several manufacturers over the years that's grappled with a tangled web of federal trade compliance rules and regulations. Even the Commerce Department recognizes that current export control laws, which date back to the Cold War era, are cumbersome and confusing.
On Oct. 1, Commerce Secretary Gary Locke proposed reforms to modernize the nation's export controls system (See "
Export Laws Under Review,"). U.S. manufacturers are losing business to foreign competitors because of the outdated system, says Locke. While the Commerce Department works to revise the laws, U.S. manufacturers face heightened enforcement of the rules and tougher penalties for violations.
In 2007, the federal government raised civil fines for unauthorized exports under the Export Administration Regulations to two times the value of a shipment up to $250,000. That's significantly higher than the $50,000-per-violation penalties that were in effect a year earlier. Violators also can face criminal charges that carry even greater fines and possibly imprisonment.
Intricacies of Export Compliance
Large and small manufacturers alike appear to be struggling with trade compliance as they seek to expand their global presence. Some violations are less obvious than others. Most manufacturers are aware that they can't ship to embargoed countries, such as Iran, North Korea and Cuba, under regulations of the Treasury Department's Office of Foreign Assets Control. They also know that shipping weapons overseas requires authorization from the State Department.
But some more innocuous items, such as aircraft engine parts or even paint, can fall under "dual-use" regulations, or rules that prohibit exporting products that could be used for commercial and military applications.
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