The purpose of an end-use verification, commonly referred to as an end-use check, it to allow the U.S. government to verify that the end-use declared on the export license application by the exporter is in fact how the U.S. origin item is being used. However, end-use checks are not just for licensed items. They can be conducted to verify the end use of items shipped under a license exception or where no license was required.
As an overarching goal, the U.S. government is trying to prevent certain items from falling into the hands of terrorist organisations, rogue states, and countries that are not allies. Items that may seem innocuous may in fact be used to make improvised explosive devices that kill our coalition troops in Afghanistan. Other items may provide a strategic advantage to coalition enemies. Enforcing controls on certain items and conducting checks to verify end-use are key to both protecting U.S. national security and ensuring that U.S. allies, such as Australia, are able to access certain U.S. origin items more easily.
In addition, as a result of U.S. export reforms many items are moving from the ITAR's USML to the EAR's CCL, making certain items easier to export without having to obtain a license from the U.S. government. Most of these items are moving to the CCL's newly created '600 series'. The U.S. government will be focusing on these items in the coming months to ensure that 600 series items are in fact being used for the end-use declared by the Australian purchaser to the U.S. exporter.
End-use checks are not meant to be an invasive or time consuming process and may even be advantageous for the Australian company undergoing the check, as explained below.
Who will conduct the end-use checks in Australia?
End-use checks will be conducted by Export Control Officers from the U.S. Department of Commerce's Bureau of Industry and Security (BIS).
Why haven't we heard of them before?
In the past, the U.S. has focused its efforts on conducting end-use checks in countries that are known to have a high risk of diversion. However, there is now a drive to focus more on allies receiving controlled U.S. origin items. One reason for this change is that U.S. export reform is resulting in a number of items moving from control under the ITAR's USML to the the Export Administration Regulation's Commerce Control List (CCL).
U.S. export reforms will make it easier for U.S. allies to obtain certain items that have moved from the USML to the CCL. It may also help reduce 'ITAR taint' for Australian manufacturers. In order to make sure that these items will be closely safeguarded in Australia, the Bureau of Industry and Security, which administers the Export Administration Regulations and its CCL, will conduct a series of end-use checks.
How will I know if my company will be targeted?
You will be contacted by the U.S. agent and they will seek to make an appointment to meet with you during their visit to Australia. You will be given information about the specific transaction they would like to examine, as well as copies of associated documentation obtained from the U.S. exporter.
Is there a cost to my company?
No. There is no cost to your company other than the time spent internally locating documentation for the agent, preparing for the meeting, and the meeting itself.
Is there any benefit to my company?
Yes. Once your company has undergone an end-use check and received a favourable result, it will be easier for U.S. exporters to obtain licenses when shipping to you, which may reduce your lead times and associated costs.
Under what authority are end use checks conducted?
The checks are conducted under the authority of the U.S. Export Administration Regulations. End-use checks are voluntary, but where a company chooses not to participate in an end-use check, they will receive an automatic ‘unfavourable’ review, which can have serious commercial consequences.
What are the consequences of not allowing the Export Control Officer from BIS to conduct an end-use check at your premises?
Refusing to allow an end-use check will lead to an automatic 'unfavourable' determination by the U.S. agent. This will result in the company being put on the ‘entity list’ in the U.S. As a matter of internal compliance policy, most U.S. exporters will not ship to companies on this list.
In this 1 minute video, Kevin Kurland, the (2012) Director of the U.S. Department of Commerce's Office of Enforcement Analysis explains what happens when an end-use check is determined to be 'unfavourable':
Is the Australian government involved?
The Australian government is aware that BIS intends to conduct end-use checks here in Australia. At this stage, the Australian government's involvement in the checks is unclear. The 2 minute video below explains the drive for end-use checks and it is clearly stated that the Australian government has discussed end-use checks with officials from BIS.
