On January 11, 2023, an investigation ended when Tao Jiang, the owner of Broad Tech System, Inc., a California-based electronics distribution company, pleaded guilty to participating in a conspiracy to conceal information from the U.S. Department of Commerce (DOC) and from U.S. Customs and Border Protection (CBP), as part of a scheme to illegally export chemicals manufactured and/or distributed by a Rhode Island-based company to a technology company in China with ties to the Chinese military.
Both Tao Jiang and the Broad Tech System, Inc. company are now scheduled to be sentenced by a federal district judge on April 11, 2023.
What is the Export Control Act?
The U.S. Export Control Act regulates how certain technology, technical data, technical assistance, and items or materials are physically or electronically exported, shipped, transmitted, transferred, or shared from the U.S. to foreign countries, persons, or entities.
Export Controls & Reporting Requirements
As of June 29, 2020—in accordance with Federal Register Notices 85 FR 34306 and 85 FR 23459—all exports to China, Russia and Venezuela have additional export controls and reporting requirements. Therefore, a freight forwarder may ask a shipper/manufacturer to review and confirm in writing that the parties to their export do not meet the definition of “military end-use” and “military end-user”—as defined in the Export Administration Regulations (EAR)—and may be exported without a license and is in accordance with the ECCN (or EAR99) and License Exception that they provided for filing.
Luckily, in the Broad Tech’s case, the manufacturer found the request suspicious, and reported it to CBP, potentially avoiding heavy fines and jail-time for themselves and the rest of their supply chain. Any party to an export transaction has a responsibility to report suspicious information to CBP. Shippers, manufacturers, and freight forwarders should take precaution to ensure due diligence on behalf of their customers and ensure their sales transaction is compliant with U.S. export controls.
Looking for more information about export controls or need a logistics partner for your supply chain? Reach out to Mohawk Global Trade Advisors.
By Clarissa Chiclana