Avoid Penalties for Mis-identifying Dual Use Goods on the L Status Immigration Form

Countless Canadians enter the U.S. to work every year. For Canadian companies with U.S. operations, U.S. “L status” allows Canadians to work in the U.S. as executive, managerial or specialized knowledge employees.

When applying for L status, employers must fill out specified forms. And buried within the fine print of these forms is an important question that has to do with export licenses for technology.

Employers must certify that they have reviewed specific U.S. export control regulations and have determined whether they need a license to release certain technology to the employee being sent to the U.S. If an export license is required, employers must indicate that the company will not release controlled technology to their employee until it has received a license or authorization to do so.

These regulations are designed to protect and control the release of products that could have military implications.

When completing this immigration form, many Canadian employers who do not deal with what they think of as controlled technology or technical data will simply check off the box indicating that a license is not needed.

However, companies dealing in goods or technologies that are considered “dual use” may unknowingly answer this question incorrectly – and face severe penalties.

What is a dual use good or technology?

Dual use goods or technologies are items that have both civilian and military applications. If a company’s non-military good or technology can have a military application – even if the military use is not intended – it may be a dual use good or technology that is controlled by U.S. regulations.

What are some examples of dual use goods or technologies?

Chemicals, electronics, computer hardware and software, navigation systems and airplane parts are just some examples of goods or technologies that may be dual use.

Years ago, Japan labelled Sony’s PlayStation2 as dual use because of components that had the characteristics of missile guidance systems.

What must your company stipulate regarding export control regulations when sending an intra-company transfer to the U.S.?

Employers sending an intra-company transfer to the U.S. must indicate whether the company requires a license under the U.S. Export Administration Regulations (EAR) and/or the International Traffic in Arms Regulations (ITAR). These two regulations impose licensing requirements on the export, re-export and in-country transfer of a wide variety of items that are controlled for commerce, national security, foreign policy and other reasons.

In some cases, corporate employers must seek and receive a U.S. Government license before releasing certain technology to foreign persons, including Canadian employees who are controlled by these regulations.

What happens if you do require a license under the EAR and/or ITAR?

If a company deals in controlled technology or technical data, it must seek the appropriate license from the U.S. Department of Commerce and/or the U.S. Department of State before the controlled technology or technical date can be distributed to Canadian employees.

What are the potential penalties for non-compliance?

When completing the immigration application for intra-company transfers, companies must provide an answer. If a company refuses to respond, the immigration application will be denied.

If a company requires a license and fails to secure the required license when needed, there can be administrative and criminal penalties. Penalties can include fines, jail time in extreme circumstances and the loss of export privileges for the entire company.

What can our company do to avoid incurring penalties?

It is important to stay up-to-date on the type of information and technology that is subject to EAR and ITAR export controls. Consider appointing one employee to regularly check information and confirm whether licensing is needed.

If your company requires licenses, be sure to apply with plenty of time as license applications can take several weeks to process in some situations.

If your company is considering preparing an application for an employee’s intra-company transfer and you are unsure whether you require an EAR and/or ITAR license, the immigration professionals at MLT Aikins can help.

This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.