Managing Foreign Direct Product Rule Compliance

Ask any group of experienced export compliance managers what they view as the most complex sections of the EAR, and you're sure to get several who point to BIS's various Foreign-Direct Product Rules ("FDPRs"). While BIS has long controlled certain items that are made using US software, hardware, and technology, we have recently witnessed – through the proliferation of FDPRs – a dramatic expansion of US export controls jurisdiction over a wide array of non-US items. The complexity of the rules, and their seemingly ever-evolving nature, can create challenges for non-US companies seeking to comply with the EAR, creating significant enforcement risks for certain transactions. Below is a high-level overview of the FDPRs and steps export compliance managers can take to identify and mitigate the risk of a violation.