Articles
Prudence a Necessity on Export Control Issues—The Boeing Case
TweetJuly 14, 2005
Recently, a headline-making case involving the Boeing Corporation has highlighted some of the potential pitfalls in exporting goods from the
Between 2000 and 2003, Boeing exported 96 commercial jets with gyrochips and 27 spare gyrochip-equipped flight boxes to
In 2004, the State Department reviewed the issue and decided that the gyrochip would be kept on the list of military items, but when integrated into commercial jet flight boxes, would be reclassified as a non-military item. Export control of these items when used in commercial jets was therefore transferred to the State Department to the Department of Commerce. However, the State Department decided to go after Boeing on the past exports of the 96 planes it sent to
Currently, these charges have not yet been filed and Boeing is in settlement talks with the State Department. Boeing has said publicly it went ahead with the exports in good faith because its lawyers had advised it that the State Department was without legal authority to regulate the exports. Aerospace industry insiders have complained publicly that export control regulations are outdated and hamper
For other companies with export control issues, the lesson that can be drawn by this is twofold. First, both the State Department and the Department of Commerce may bring charges to preserve their authority over a disputed licensing issue even when the underlying question is ultimately determined in favor of the company seeking to export. Therefore, an admonition by the State or Commerce not to export without a license, or a classification or advisory opinion or licensing decision should be heeded no matter how ill-founded it seems. Secondly, clients cannot rely on advice of counsel to protect them from civil prosecution if they choose to export contrary to the position of the Department of State or Commerce, even if that legal advice was well-grounded. A client that chooses to follow their lawyer’s advice if it conflicts with State or Commerce’s direction or opinion may find themselves facing huge fines—even if their lawyer was quite correct. On export control issues, prudence should be the rule at all times.