Nelson Dong, Dorsey partner and and chair of the firm's Asia practice group, discusses the application of the Export Administration Regulations (EAR) to U.S. companies doing business with China or employing Chinese nationals in an R&D Executive Magazine article. Under these regulations, U.S. companies and universities are prohibited from exporting controlled technology or permitting unlawful access to the same by a Chinese national they employ without an export license.
Dong reports that since 2001, U.S. government enforcement agencies have effectively tripled their collective rate of convictions in cases involving technology transfer to China or Chinese nationals in violation of EAR. Under EAR, release of prohibited technology can be implicated by visual inspection by foreign nationals, oral exchanges, or application under the guidance of persons with knowledge of the technology.
Since the explosive growth of the Chinese market has caused virtually all parts of U.S. companies, from R&D and marketing to manufacturing and HR, to have direct and fast-moving contact with Chinese nationals, Dong counsels these companies to institute comprehensive EAR compliance measures. He also urges U.S. universities to be thoughtful and vigilant to ensure that corporate-sponsored research programs will clearly remain within the long standing "educational information" or "fundamental research" exemptions to EAR compliance.
The article "The New Challenges of 'Deemed Exports' to China" was published in the June 1, 2006 edition of R&D Executive Magazine.