Commentary: Patience tried by export license backlog

Now is the time for export compliance officers to explain to senior management the reasons for the delays in BIS and hold the line on compliance.    Just because the federal government shutdown is over doesn’t mean the Commerce Department’s Bureau of Industry and Security will now expedite exporters’ delayed license applications.
   In fact, the best that BIS’ already burdened licensing staff can say is: “We will take the submissions in the order received.”
   Already in front of new export license applications is a heavy backlog of yet-to-be processed ones that were idled during the 35-day shutdown that ended last Friday. Many of these pre-existing license applications must go through the interagency approval process — including reviews by State, Defense and Energy departments and the Nuclear Regulatory Commission if nuclear materials are involved.
   The problem U.S. exporters will have under this post-government shutdown circumstance is predicting the timing of the interagency process, which could be up to 30 calendar days or longer. BIS will have little impact on the processing of those cases undergoing the interagency review, and these other department agencies with U.S. export control oversight are surely backlogged themselves.
   An exporter might attempt to file an emergency export license application with BIS, but it must be justified with a statement of urgency from the “end user,” and if accepted as an emergency, the license is only valid for 30 days from the end of the month approved.
   Urgency based on “revenue recognition” is not enough to justify this license status with BIS since everyone is facing the same problem. It must be a legitimate emergency related to medical, humanitarian or potential manufacturing shutdown by the end user.
   Similarly, BIS was also forced during the government shutdown to put other export control requests, such as classification requests, encryption reviews and registrations and advisory opinions, on hold. That will be another significant backlog for BIS to resolve before tackling the incoming tidal wave of new requests from exporters.
    In the best of times, BIS processed about 2,000 license applications a month, but that level of efficiency won’t be achieved for some time, and that’s if the federal government doesn’t close again on Feb. 15.
   As an export compliance consultant who has worked with numerous companies over the past 35 years, I’m most sympathetic to the pressures that many export compliance officers are now experiencing from within their corporations — from financial and sales to manufacturing and supply chain — to secure the necessary licenses to consummate held-up business deals and get their products moving.
   However, now is the time for export compliance officers to explain to senior managers across the corporation, including any overseas subsidiaries and affiliates, about the current export licensing backlog and processing delays within the U.S. government and to emphasize patience. To circumvent export compliance for the sake of financial expediency could result in down-the-road civil and criminal penalties, as well as a halt to exports, which would be far worse than the effects of the recent government shutdown.

   DiVecchio, principal of Boston-based DiVecchio & Associates, has provided export compliance consulting services to U.S. exporters for more than 35 years. He may be reached by email at pauldivec@earthlink.net.