"In the past, the United States and the European Union operated export control systems along similar lines. But through the Middle East war, the US and EU export control regimes have fallen out of sync. This is why companies need to pay greater attention to building preemptive compliance systems to prepare for export-import regulations."
Hwang Ho-sung, head of Bae, Kim & Lee's Export-Import Regulation Response Center, emphasized this in an interview with Seoul Economic Daily on Monday, saying, "Since the Middle East war, export-import regulations that had been aligned with the US are now diverging by country, and cases of companies suffering damages are increasing."
The most representative example is the recent difference in temperature between the US and EU over Russian crude oil. While the US eased sanctions on Russian crude oil as a follow-up measure to the Strait of Hormuz blockade, the EU has not lifted its sanctions. The problem is that most marine insurance companies covering vessels transporting crude oil are based in the EU region. Even if companies import crude oil, there is no way to bring it into the country, causing significant difficulties for many Korean companies.
Kim Ji-ina, an attorney serving as deputy head of the center, explained, "As regulations become fragmented globally, export companies with supply chains in multiple countries find it extremely difficult to take a consistent position."
Bae, Kim & Lee's Export-Import Regulation Response Center was launched last October to respond to such corporate difficulties. The center consists of about 60 experts in fields including strategic materials, export controls (EAR, ITAR, etc.), National Core Technology (NCT), National High Technology (NHT), defense, customs duties, customs clearance, international taxation, international disputes, and criminal law.
The two emphasized that even companies without direct transactions with the Middle East cannot escape the scope of export-import regulations. Even if a company is not a direct party to a transaction, if any point in the supply chain becomes subject to export-import regulations, the entire transaction becomes impossible.
"For example, even without direct transactions with the Middle East, indirect sanction risks can arise when third-country companies related to the Middle East are included in raw material or component supply chains, when settlement networks with US or EU financial institutions are used, or when reinsurance, logistics, or transportation systems are linked to sanctioned regions," Hwang said. "Companies should pay more attention to who is involved in the transaction and through what routes products are transported, rather than just 'who they contracted with.'"
The field the center has been focusing on recently is the defense industry. As the Middle East war has increased demand for defense products, export-import regulations in various countries have simultaneously been tightened. Beyond items officially designated as defense materials, components and parts related to defense materials are likely to fall under regulation as strategic materials. In other words, companies need to check in advance not only export permits for simple defense products but also permit issues for strategic materials.
"In the past, defense sector advisory was often outsourced to foreign law firms, but recently demand for domestic law firms has surged," Kim said. "The role of domestic law firms as 'overall coordinators' who can simultaneously examine Korean headquarters, overseas production bases, export country regulatory authorities, and domestic regulatory agencies has become important."
Bae, Kim & Lee's Export-Import Regulation Response Center plans to provide 'one-stop' services based on its extensive practical experience and expertise across domestic and international export-import regulations.
"I want to go beyond diagnosing the various export-import regulations that companies face, and become 'one team' with companies to create a 'safe zone' that helps them close deals successfully," Hwang stressed.
