“BREAKING DEFENSE” – By Justin Katz
“A senior Commerce Department official said the policies had already been in use internally, but will now be enshrined in law.”
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“The Commerce Department today announced it has finalized new policies to incentivize industry to voluntarily disclose export control violations to the government and has appointed a “first-ever” chief of corporate enforcement to coordinate between Commerce and Justice Department offices.
“We want [companies] to come tell us that [a violation] happened, and we provide incentives for companies to do that,” Matthew Axelrod, assistant secretary of commerce for export enforcement, said today. “And for a long time, it’s been clear that if you come in to us, in other words, you knock on our door before we knock on yours, you get concrete benefits. We will treat you better. You get a reduction in penalty.”
Specifically the new rule gives Commerce’s Bureau of Industry and Security “increased flexibility to determine fair and appropriate penalty amounts while also making it less burdensome for companies to submit certain [voluntary self-disclosures],” according to a BIS statement. “The rule revises the BIS Penalty Guidelines to change how the Office of Export Enforcement (OEE) calculates the base penalty in administrative cases and how OEE applies various factors to the base penalty to determine the final penalty.”
Axelrod, speaking at an event hosted by the Center for Strategic and International Studies, said many of the changes were already in effect at his office as a matter of internal policy, but they will now be enshrined in law for future administrations.
Axelrod’s office is responsible for enforcement of the Export Administration Regulations (EAR), which, in essence, dictate what kinds of technologies private industry can sell to actors outside the United States. (The EAR regulates the export of certain dual use technologies — meaning they have both civil and military applications, such as avionics and lasers — but are separate from the International Traffic in Arms Regulations, which is managed by the State Department.)
Though the new rule doesn’t specifically apply only to defense firms, earlier in his talk Axelrod highlighted the importance of keeping defense tech out of adversaries’ hands.
“Whoever gets there first on hypersonics has a huge advantage in the current and future battlefield tactics,” Axelrod said. “That’s why it’s so important to … the United States, that those technologies be protected, because the US is the leader in a number of them.”
Raj Parekh, a former US attorney for the Eastern District of Virginia, will serve as Commerce’s first chief of corporate enforcement. Parekh’s job will be to “serve as the primary interface between BIS’s special agents, the Department of Commerce’s Office of Chief Counsel for Industry and Security, and the Department of Justice to advance significant corporate investigations,” according to the BIS statement.
“Today’s rule changes and appointment of Raj Parekh as chief of corporate enforcement are important steps in institutionalizing the progress we’ve made over the past three years to strengthen our administrative enforcement program,” Axelrod said, this time quoted in the department’s statement. “The stakes of ensuring that we have the proper tools to deter export violations and — when that deterrence fails — to hold violators accountable could not be higher.”
ABOUT THE AUTHOR:
Justin Katz
Prior to joining Breaking Defense, Justin Katz reported on the Navy and Marine Corps as an associate editor for Inside Defense, where he focused on the services’ largest acquisition programs and congressional committees overseeing them. Justin has also covered the federal government’s cybersecurity policies and programs for FCW and a worked as a general news reporter in both Baltimore and Washington, D.C. Katz graduated from Flagler College in St. Augustine, Fla., in 2015 with a degree in communications focusing on journalism and is a native of Long Island, N.Y. jkatz@breakingmedia.com
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