Mary O` Brien of Seagate Talks on Export Compliance

By Damon Shulenberger

On Friday, March 22 Mary O`Brien, Trade Compliance Manager at Seagate Technology in Scotts Valley spoke at a Trade Club lunchtime discussion on the issue of export compliance. 

Working currently in the private sector, O`Brien has had a long career in government. Starting in the Social Security Administration, she had minimal exposure to trade issues during her first dozen years in Washington. She said one of the benefits of a government job is that it is relatively easy to switch departments and she was able to successfully apply for a job at the Commerce Department in export compliance. 

One of the things O`Brien enjoyed about working in that field was the ability it afforded her for travel to places like Russia, India, Pakistan and Yemen. For example, she travelled to inspect a Pakistani scientific institute because there was a proposed export to the facility where Pakistan developed its nuclear weapons.  She recalled driving through a dry brown landscape to the facility and remarking on a couple of hills that seemed strangely green. As they drove closer these turned out to be anti-aircraft weapons arrayed on the hills to protect the facility from aerial attack.

After returning to Washington in 2001, O`Brien became an export control officer for the Foreign Commercial Service (FCS) in the Commerce Department. The FCS runs commercial offices around the world out of US embassies.  O`Brien recommends the FCS as a stop on a career in international trade because one gets to learn a lot about how a region`s trade operates.  When O`Brien was in the UAE with Commerce, her job was 50% Bureau of Industry and Security (BIS) and 50% FCS work. Because FCS is involved in trade promotion and BIS in trade security, O`brien sometimes found herself “walking a fine line.” On the FCS side she often worked with US companies looking to expand their opportunities into the UAE, particularly because the UAE has a lot of money,  they “love the newest toys” and they have Iran directly across the Strait of Hormuz. While Iran is the UAE`s largest non-oil trading partner they clearly have some significant security concerns.  

The FCS is concerned about numerous front companies in the UAE that divert high technology goods imported from the US to Iran.  In her two years in the UAE O`Brien visited in excess of 200 companies, targeting companies that had applied for a US export license; for example if a US company wanted to send them sensitive (non-munition) products––a machine tool or a mass-spectrometer––they needed to go through a FCS screening beforehand.  O`Brien also inspected companies after products had been shipped, making sure the products were being used for their stated purposes. She would ask the company, “Okay, show me the product and show me where you are going to use it.” Or–– “if you don`t have it, whose got it?” O`Brien categorized about 30% of the companies she inspected as “not being on the up and up”. She recalled one company trying to set up an elaborate wood-working facility in order to justify ordering machine tools: “There wasn`t even sawdust on the floor––the company had gone someplace and bought some pre-finished carved doors and some blanks. Those were sitting in there, and they had a big long lathe and some Pakistani workers using the lathe, but it was nowhere near a functioning enterprise.”  O`Brien guessed the intended destination of the products to be a third country and their export license application was turned down. 

If companies are deemed to be untrustworthy they are put on the Commerce Department`s “unverified” list which is a list of companies that haven`t cooperated with US checks. There are about 13 companies on that list specifically because they would not cooperate with O`Brien or because she found they had sent product to Iran. 

After leaving the UAE O`Brien went back to the US and started looking at private sector employment opportunities.  She found there to be many companies out there that had trade compliance departments and could use her expertise, from weapons makers to auto companies. She finally decided to go with GE`s jet engines department, which is heavily regulated by the Department of State. While Commerce has jurisdiction over the export of commercial and dual-use technologies, State has jurisdiction over munitions. Working with GE she developed an appreciation of the hurdles companies have to go through to get an export license from the State Department.  

Take a situation in which a company such as GE wants to set up a joint venture with a French company using the advantages of both companies to develop a fighter jet engine.  First, they have to obtain permission from State to share enough technical information in the negotiations to even come to a contract. Then, after signing the contract, they have to get a technical assistance agreement that allows the GE people to consult with the French people on whether the engine is being built to specs. They also have to get a manufacturing licensing agreement which allows GE to provide certain information to the French company so that the French company can manufacture the contracted parts.  On top of that, they need State Department licenses in order to physically send goods from the US to France in order make the engine. For one transaction that`s four licenses–– pages and pages of documentation that can take 6-8 months to process. Further, if the French company hires Polish workers, one part of the technical assistance agreement needs to be drafted to cover the transfer of technical knowledge to those non-French workers. This is why O`Brien believes that companies that fall under the jurisdiction of State Department export regulations offer attractive places to work in terms of job security.  However, she found dealing with all the licenses frustrating and overwhelming––it is one of the reasons she now resides at Seagate.

Companies whose products fall under the jurisdiction of Commerce export compliance licenses have a much easier time of it than those whose products fall under State jurisdiction.  Many Commerce regulated products don`t require license––in the past 18 months since O`brien started working at Seagate only two items have required export licenses. 

Seagate does have to worry about whether exports are going to “bad” places. As it expands its business model to international direct sales Seagate has had to carefully screen customers to make sure they aren`t diverting product to countries like Iran.  This is because, as in the case with exports to the UAE, Commerce non-license rules apply only to trade with friendly countries.

There are also some possible military application issues O`Brien must deal with in her position.  Seagate makes a line of ruggedized hard drives designed to withstand heavy impacts in cars. The ruggedized hard drives have a possible dual military use in artillery vehicles. The rule is, as long as the same model of hard drive that is sold for commercial purposes is utilized militarily, it falls under Commerce jurisdiction. Modifications to these drives for military customers are problematic because as soon as you make a modification for any military entity it is subject to cumbersome International Trafficking and Arms regulations (ITAR)––i.e. State Department jurisdiction. 

In closing her informative presentation, Ms. O`Brien gave attendees specific job-hunting advice for the private sector and  pointed out that although she prefers the living in California, Washington DC offers so many opportunities in trade compliance generally that it`s a very worthwhile place to make a stop for a few years.

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