Introduction: Export Controls in the New Space Economy
The space industry is experiencing unprecedented growth, with private companies launching satellites, developing reusable rockets, and planning missions to the Moon and Mars. However, this innovation comes with significant regulatory responsibilities. Space technology, along with many other advanced hardware products, is subject to strict export control regulations designed to protect national security while enabling legitimate international commerce.
For hardware companies developing space technology, robotics, advanced manufacturing equipment, or other dual-use products, understanding and complying with export control regulations is not optional—it's essential for doing business globally. The primary framework governing these exports in the United States is the Export Administration Regulations (EAR), administered by the Bureau of Industry and Security (BIS). In the European Union, the Dual-Use Regulation (EU 2021/821) serves a similar purpose.
This article provides a comprehensive overview of export control compliance for space tech and hardware companies, with a focus on how a modern cloud-based Product Data Management (PDM) system can help you maintain compliance while collaborating with international partners and customers.
Understanding Export Controls: EAR vs. ITAR
Many hardware companies are familiar with ITAR (International Traffic in Arms Regulations), which controls the export of defense articles and services. However, most space technology and commercial hardware falls under the Export Administration Regulations (EAR) rather than ITAR.
The distinction is important. In 2013, the U.S. government reformed export controls and transferred many commercial satellites and related items from the more restrictive ITAR to the EAR [1]. This reform recognized that most commercial space technology is dual-use—it can be used for both civilian and military purposes—rather than being inherently military in nature.
What is EAR?
The Export Administration Regulations control the export, reexport, and transfer of commercial and dual-use items. These include:
Commercial satellites and spacecraft
Launch vehicles and propulsion systems
Ground control equipment
Robotics and automation systems
Advanced manufacturing equipment
High-performance computing systems
Certain software and technology
Items controlled under the EAR are classified using the Commerce Control List (CCL) and assigned an Export Control Classification Number (ECCN). Depending on the ECCN and the destination country, you may need to obtain a license from BIS before exporting the item.
Recent Regulatory Changes
In October 2024, BIS announced significant updates to space-related export controls, further easing restrictions on certain spacecraft and related items when exported to close allies [2]. These changes reflect the government's recognition that overly restrictive export controls can hinder U.S. competitiveness in the global space market. However, they also place greater responsibility on companies to understand and comply with the regulations.
The 2024 updates include several important changes:
Removal of License Requirements for Certain Spacecraft: Many commercial satellites and related items no longer require export licenses when shipped to close allies like the UK, Canada, and Australia. This significantly reduces the administrative burden for space companies doing business with these countries.
Streamlined Controls for Remote Sensing: The rules governing remote sensing satellites have been modernized to reflect current technology and market realities. However, high-resolution imaging systems still face restrictions.
Updated Space-Based Logistics Controls: As space-based assembly and servicing becomes more common, BIS has introduced new controls to address these emerging capabilities while still enabling commercial innovation.
These changes demonstrate the government's effort to balance national security concerns with the need to support a competitive U.S. space industry. For hardware companies, staying current with these regulatory updates is essential.
EU Dual-Use Regulation
For companies operating in or exporting to the European Union, the EU Dual-Use Regulation (EU 2021/821) is the equivalent framework to the U.S. EAR. This regulation controls the export of dual-use items from the EU and establishes a common control list for all member states [3].
Key aspects of the EU regulation include:
Common Control List: The EU maintains a list of controlled dual-use items that is regularly updated to align with international export control regimes like the Wassenaar Arrangement.
Member State Implementation: While the EU sets the framework, individual member states are responsible for licensing and enforcement. This means that procedures and interpretation can vary between countries.
Catch-All Clause: Even items not on the control list may require a license if the exporter knows or suspects they will be used for weapons development or other prohibited purposes.
Human Rights Considerations: The EU regulation includes provisions for controlling exports that could be used for human rights violations, going beyond traditional national security concerns.
For hardware companies operating globally, understanding both the U.S. EAR and EU Dual-Use Regulation is often necessary.
What Are Dual-Use Items?
Dual-use items are products, software, or technology that can be used for both civilian and military applications. The classic example is GPS technology, which is used in everything from smartphone navigation to precision-guided munitions.
For hardware companies, many common products and components can be considered dual-use:
Product Category
Civilian Use
Potential Military Use
High-resolution cameras
Earth observation, scientific research
Reconnaissance, targeting
Encryption software
Secure communications, data protection
Military communications
Drones and UAVs
Aerial photography, delivery
Surveillance, weapons delivery
Advanced materials
Lightweight structures, thermal protection
Armor, stealth technology
Precision manufacturing equipment
Commercial production
Weapons manufacturing
The dual-use nature of these items is why export controls exist—to prevent sensitive technology from reaching adversaries while still allowing legitimate commercial trade.
Export Control Challenges for Hardware Companies
Complying with export controls presents several challenges for hardware companies, particularly those using cloud-based collaboration tools:
Data Classification and Control
The first challenge is identifying which of your technical data is subject to export controls. Under the EAR, "technology" is defined as specific information necessary for the development, production, or use of a product. This includes:
CAD files and engineering drawings
Manufacturing specifications and processes
Test data and performance characteristics
Software source code
Technical know-how and trade secrets
Not all technical data is controlled—only that which meets the criteria specified in the CCL. However, determining whether your data is controlled requires careful analysis of the regulations and, often, consultation with export control counsel.
International Collaboration
Modern hardware development is inherently global. You may have engineers in multiple countries, suppliers in Asia, customers in Europe, and investors in the Middle East. Each time you share controlled technical data with a foreign person or entity, you must consider whether an export license is required.
The challenge is compounded in a cloud environment, where data can be accessed from anywhere in the world. If a foreign engineer logs into your cloud PDM system from their home country and downloads a controlled CAD file, that constitutes an export and may require a license.
Deemed Exports
Similar to ITAR, the EAR includes the concept of "deemed exports." A deemed export occurs when controlled technology is released to a foreign national within the United States. This means that if you hire a foreign engineer (even one legally working in the U.S. on a visa) and give them access to controlled technical data, you have made a deemed export.
This creates compliance challenges for companies with diverse workforces. You must track the citizenship of your employees and contractors and ensure that only those authorized to access controlled data can do so.
Changing Regulations
Export control regulations are constantly evolving in response to geopolitical developments and technological advances. The 2024 updates to space-related controls are just one example. Companies must stay informed about regulatory changes and adjust their compliance programs accordingly.
Recent trends in export control regulation include:
Emerging Technology Controls: Governments are increasingly focused on controlling emerging technologies like artificial intelligence, quantum computing, and advanced robotics. These controls can affect hardware companies even if they don't consider themselves to be in the "tech" sector.
Supply Chain Security: New regulations address concerns about supply chain vulnerabilities, particularly regarding components from certain countries. This can affect your ability to source parts globally.
Sanctions and Entity Lists: The Entity List (companies subject to special restrictions) is updated frequently, sometimes weekly. A supplier or customer that was unrestricted yesterday may be prohibited today.
Extraterritorial Application: Both U.S. and EU export controls can apply to foreign companies in certain circumstances, particularly when U.S.-origin technology is involved. This creates compliance obligations even for non-U.S. companies.
The Cost of Non-Compliance
Export control violations can result in severe consequences:
Civil Penalties: BIS can impose civil penalties of up to $364,992 per violation or twice the value of the transaction, whichever is greater (as of 2024, adjusted annually) [1]. For willful violations, criminal penalties can include fines up to $1 million and imprisonment for up to 20 years.
Denial of Export Privileges: Companies found in violation can be denied export privileges, effectively preventing them from exporting any items subject to the EAR. This can be a death sentence for hardware companies that rely on global supply chains and customers.
Reputational Damage: Export control violations often become public, damaging relationships with customers, partners, and investors. Government contractors may be disqualified from future opportunities.
Operational Disruption: Investigations and remediation efforts can consume significant management time and resources, disrupting normal business operations.
Given these risks, investing in compliance infrastructure—including a capable PDM system—is not just a legal requirement but a sound business decision.
Essential PDM Features for Export Compliance
A modern cloud PDM system can be a powerful tool for managing export control compliance. However, not all PDM systems are created equal. Here are the essential features to look for:
Data Classification and Tagging
The PDM system should allow you to classify and tag files based on their export control status. This might include:
ECCN classification
Export license requirements
Destination restrictions
Technology level (fundamental research, public domain, controlled)
Once classified, the system should enforce access controls based on these tags, ensuring that only authorized users can access controlled data.
Geographic Access Controls
The ability to restrict access based on user location is critical for export compliance. Your PDM system should be able to:
Detect the geographic location of users attempting to access data
Block access from prohibited countries or regions
Log all access attempts, including location information
Alert administrators to suspicious access patterns
User Attribute Management
Beyond location, the system should allow you to manage user attributes relevant to export controls, such as:
Citizenship or nationality
Security clearance level
Export license authorizations
Training and certification status
These attributes can then be used to enforce fine-grained access controls.
Comprehensive Audit Trails
Export compliance audits require detailed records of who accessed what data, when, and from where. Your PDM system should automatically log:
All file access, downloads, and modifications
User authentication events
Failed access attempts
Data sharing and collaboration activities
Changes to access permissions
These logs must be immutable, searchable, and retained for the period required by your compliance program (typically several years).
Secure Collaboration Tools
When you need to share controlled data with authorized foreign partners, the PDM system should provide secure collaboration features:
Watermarking to prevent unauthorized redistribution
View-only modes that prevent downloading
Encrypted file sharing
Audit trails of all sharing activities
CAD ROOMS Export Control Support
CAD ROOMS is designed to help hardware companies manage the complexities of export control compliance. Our cloud-native PDM solution provides:
Granular Access Controls: Define user roles and permissions with precision, ensuring that only authorized individuals can access controlled technical data.
Comprehensive Audit Trails: Track every action in the system, providing the detailed records you need for compliance audits.
Secure Collaboration: Collaborate with authorized partners through secure file sharing and full audit visibility. Access can be managed via permissions and role settings to ensure controlled collaboration with traceable activity history.
Customer Responsibility: While CAD ROOMS provides the tools to support export compliance, it is important to understand that compliance is a shared responsibility. Your organization is responsible for classifying your data, determining license requirements, managing user authorizations, and implementing appropriate compliance procedures. CAD ROOMS provides compliance-enabling capabilities but does not determine the regulatory classification or licensing status of any data or technology.
Best Practices for Maintaining Export Compliance
Technology alone cannot ensure export compliance. Hardware companies must implement comprehensive compliance programs that include:
Establish a Compliance Program
Every company dealing with controlled items or technology should establish a formal export compliance program. This program should include:
Designated Export Compliance Officer: A senior employee responsible for overseeing the program.
Written Policies and Procedures: Clear documentation of how your company identifies controlled items, determines license requirements, and manages exports.
Compliance Committee: A cross-functional team to review export transactions and make decisions.
Regular Program Audits: Periodic reviews to ensure the program remains effective.
Classify Your Products and Technology
Conduct a thorough review of your products, software, and technical data to determine their export control classification. This may require:
Consulting the Commerce Control List (CCL)
Reviewing technical specifications
Submitting classification requests to BIS if uncertain
Documenting your classification decisions
Implement Screening Procedures
Before sharing controlled data or exporting products, screen the recipient against government restricted party lists, including:
Denied Persons List
Entity List
Unverified List
Specially Designated Nationals List
Many companies use automated screening software to check parties against these lists in real-time.
Provide Employee Training
All employees who handle controlled items or data should receive regular export compliance training. This should include:
Overview of export control regulations
How to identify controlled items and technology
Procedures for obtaining export licenses
Consequences of violations
Company-specific policies and procedures
Maintain Detailed Records
Export compliance requires meticulous record-keeping. Maintain records of:
Product classifications
License applications and authorizations
Export transactions
Screening results
Training activities
Compliance audits
These records should be retained for at least five years, as required by the EAR.
Stay Informed About Regulatory Changes
Export control regulations change frequently. Subscribe to BIS updates, participate in industry associations, and work with experienced export counsel to stay informed about regulatory developments that may affect your business.
Real-World Scenarios: Space Tech Companies
To illustrate how these principles apply in practice, consider these scenarios based on real-world space tech companies:
Scenario 1: Satellite Manufacturer Collaborating with European Partner
A U.S. satellite manufacturer is developing a new Earth observation satellite in partnership with a European aerospace company. The satellite's imaging system includes controlled technology (ECCN 9A515).
Compliance Challenges:
Sharing controlled CAD files and specifications with European engineers
Managing access to ensure only authorized personnel can view controlled data
Tracking which data has been shared under which license authorization
PDM Solution:
Classify all satellite design files with appropriate ECCN tags
Create a separate workspace for the European partner with controlled access
Associate shared files with the relevant export license identifiers in your internal compliance records, and ensure sharing rules reflect the license scope
Maintain comprehensive audit trails of all data sharing
Scenario 2: Launch Vehicle Company with Global Workforce
A launch vehicle startup has engineers in the U.S., Canada, and India. Some of their propulsion technology is controlled under ECCN 9A004.
Compliance Challenges:
Deemed exports to foreign national employees in the U.S.
Preventing unauthorized access by engineers in India
Managing access when employees travel internationally
PDM Solution:
Tag all propulsion-related files as export-controlled
Implement citizenship-based access controls
Enforce location-aware access policies (via your identity provider, network controls, or complementary security tooling) to prevent access from non-authorized regions
Monitor access attempts and alert compliance officer to unusual patterns
Following the 2024 EAR updates, a spacecraft manufacturer discovers that some of their components are no longer controlled when exported to certain allied countries.
Compliance Challenges:
Identifying which files are affected by the regulatory change
Updating classifications and access controls
Communicating changes to the team
PDM Solution:
Use search and filtering to identify files with affected ECCN classifications
Bulk update classifications and access permissions
Use notification features to inform relevant team members
Document the reclassification decision in the audit trail
Conclusion: Building a Compliant Technology Stack
For space tech and hardware companies, export control compliance is not a one-time checkbox—it's an ongoing responsibility that requires the right combination of technology, processes, and expertise. A modern cloud PDM system is an essential component of a compliant technology stack, providing the tools you need to classify data, control access, and maintain audit trails.
However, technology is only part of the solution. Companies must also invest in compliance programs, employee training, and expert guidance to navigate the complex and evolving landscape of export controls. By taking a proactive approach to compliance, hardware companies can protect their technology, avoid costly violations, and compete effectively in the global marketplace.
CAD ROOMS is committed to helping space tech and hardware companies build compliant and efficient product development workflows. Our cloud-native PDM solution provides the security, control, and audit capabilities you need to manage export-controlled data with confidence. To learn more about how CAD ROOMS can support your export compliance program, schedule a demo with our team today.
Disclaimer: This article is provided for informational purposes only and does not constitute legal advice. Export control regulations are complex and subject to change. Companies should consult with qualified export control counsel to ensure their compliance programs meet all legal requirements.
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