Jr (00:00) export control system is changing in real time. Today, there are more than 1,400 Russia-related sanction designations, a third of global export control actions tied to technology and security, and now 30 % of multinationals saying their biggest challenge isn't US rules, but EU-US divergence. Anna Goncz (00:00) You're Jr (00:28) Europe isn't following anymore. It's shaping the rules. And if you're not watching closely, you're already behind. Anna Goncz (00:29) Hearing? Jr (00:58) Today we're going to look at export controls from inside Europe, not from Washington, not from headlines, but from someone who's working in the middle of it all and seeing how these changes play out across Europe every day. Anna, welcome to episode 29 of Written Reflections. It's great having you join me on this podcast and to once again reconnect. Anna Goncz (00:58) Today we're going to look at you It's a great time to... Thank you, Jeff. And I really appreciate for joining this podcast and I hope I can bring some clarity as to how the European export controls are evolving these days. Jr (01:36) Well, that's great. I'm especially excited to have you here for this discussion. And you and I go back to our Intel days. And since then, you've built a fascinating path. You're in the process of building a ranch in Poland where you'll keep your horses, while at the same time running an export compliance academy that's helping companies navigate one of the most complex regulatory systems in the world. So before we get into the EU framework and the cross-border issues, I'd love to start with your story. How did this combination of building the ranch and launching the Academy, how did that come together for you? Anna Goncz (02:15) Okay, so you know, I've been in export ⁓ controls and sanction space for many years now, over 14 years, I think now. And I started my career really with the US export controls in the defense companies and then moved from to Intel where we met. And obviously this was also a very great opportunity for me. And then I moved to automotive industry when I left Intel just over three years ago, maybe just less than that, two and a half. And really, you know, so the one side of it is I remember my days when I first started the export compliance career. You know, it was very steady. I could learn by practicing and everything. So this now. we see how dramatically that space has changed. And that gave me sort of an idea that there many professionals, companies. that are actually entering the world of international trade, but they don't really, maybe not understand, but they are not aware that something like export control regulations, we hear more about sanctions, but export control regulations is also a piece to it, where really there needs to be aware, know how to apply them and know when they apply. building a ranch is something that we've decided some time ago, is just to have our sort of little space in the world where we can just chill and you know be closer to the nature and I own two horses so I want them close to me as well. So I think that's basically why I decided to combine the two in the same time. It was accidental. Jr (03:57) Wow, that's a very interesting combination. You have two horses. So I've never been around horses very much, but I imagine that must be a lot of fun. Do you ride them? Anna Goncz (04:02) Yep. ⁓ Yes, I do. I have a 22 year old and two year old. So it's a granny and a baby. Jr (04:14) ⁓ wow. Anna Goncz (04:17) and basically, yes, I do ride them, but also, you know, spending the time with horses is not so much different to being in export controls. And to summarize this, how you can compare the two is, you know, one wrong decision in a hurry may trigger ultimately the consequences you don't expect. Jr (04:37) That's a good one. Yes. Very good. Well, you know, this, this Academy, I'm very interested in that. And you kind of described why you started it. But what I'm curious to know is what, what topics are people most interested in? Anna Goncz (04:39) Hmm. Thank So since I've run already the first intake and first, we almost done with the first ⁓ cohort of the Academy. So the topics that are covered within the Academy are basically the EU export controls, but also there is a lot of input from the US export control side. Why? Because I think the two regulations still are very much confused. And what's really interesting is people heard about US export controls, know, ITA, EAR, but then when I ask, okay, so what do you know about EU export controls, dual use? I know I've never been exposed to that and I'm thinking, okay, but you hear about EAR, so I mean... So this type of conversations drove me to the point when I thought, okay, we need to put some US export controls into it. Very basic, but explaining how they to interact in Europe, sort of, and what do you need to be mindful of. And the most really interest is in the dual use classification. Jr (05:58) Well, that's interesting. I'm glad you started the Academy. Maybe one of these days I'll join you But we have an opportunity to learn right now. So let's shift over to Europe because that's the focus of this conversation. And where you're sitting, from your vantage point, what do you think is driving Europe's increased focus on export controls at this moment? Anna Goncz (06:22) I think there are probably few drivers and we need to look at it and think about it as a shift from free trade first to security and resilience alongside trade. And really it's because you know there are few things currently ⁓ driving it. One of them is geopolitics. You know, things like technology now is becoming very strategic, such as chips, AI, quantum, you know, that's something. be mindful of and I think this is one of the core drivers currently. But there is some other things that also drive this, you know, that we can ⁓ think of like alignment with the United States on sensitive technology exports, know, dual use concerns that, know, before the regulations were more static. Now it's been more visible when it's really about preventing capability transfers, not just regulating trade itself. So I would say that these are the main core drivers for you currently focusing on export controls. Jr (07:28) Okay, and so this new kind of posture that you're seeing, how has it changed in the last few years? I mean, we think about the Russian invasion of Ukraine and it seemed like there was a lot of focus on Europe at that point. So how are you seeing this play out? Anna Goncz (07:45) Yes, that's a very good question. know, the Russia invasion of Ukraine was really a turning point. Probably there was already plans to sort of increase export controls and more focus on it, but it really accelerated back then. So before 2022, export controls in EU were more technical, regulatory and very slow moving. There was not a lot of changes happening. and mainly focused on non-proliferation such as weapons and nuclear technology and they were not really visible as such. Now after 2022 what really happened is suddenly speed and scale of export regulatory changes increased dramatically, sanctions packages one after the other against Russia and then I think now they are used more like a frontline of geopolitics too. The next thing after 2022 that happens and currently is being really focused on is the enforcement. That became a priority in the EU. So we see a lot of companies being fined or sentenced for sanctions violations, export control violations and circumvention via countries. That's something else that's being really in the regulatory language. almost with the sanction packages that, you know, although we have controls on direct exports or imports from Russia, Belarus, but there is a lot of, you know, movement through the third parties and sensitive countries such as, you know, Kazakhstan, ⁓ United Arab Emirates, Turkey. So I think this is something that never been there before. And obviously also we could see a broader scope of EU export controls, know, advanced electronics, components critical for the fence production, these all now being very much controlled. So I think overall, you know, this was a full speed. changes in the regulations and while over the last few months it's kind of been a little bit more steady but still we're waiting for another sanctions package that hasn't been issued yet. Jr (10:13) Yeah, I can validate that. I recall after the invasion, the number of sanction packages that were implemented, it was very unusual. I mean, there were always sanctions, but not to that extent. And I also am very familiar with the risk of diversion, the circumvention, having had to testify before Congress on this. And so I can see where Anna Goncz (10:31) Yeah. Jr (10:36) you know, sanctions is one thing, but if goods are still showing up, then the question becomes how and how do we stop that? And so I can see how that has that the Russia invasion, I think probably was a critical moment for Europe to really re revalidate and re look at the controls. So, you know, from your vantage point, Anna, what what? When you think about people who are outside of Europe and you work currently, I'm sure, with MINI and you've worked at Intel with MINI, but for those outside of the Europe that are kind of looking at the region, what do you think is often most misunderstood about how the EU approaches this? Anna Goncz (11:18) So I think there could be few points that people misunderstood of the Europe's approach. I think one critical is people think that Europe acts as a unified actor, meaning that everything is the same across all member states. Somewhat that is true, but not fully because it's a balance between EU level coordination. Obviously the framework from the European Commission is given, but then it's up to each member state to implement it. And what does it mean is that countries like Germany, France or Netherlands may have a different risk tolerance and that is actually happening. So the way they interpret the regulation. is up to each country. So this is why we see some differences between the regulatory interpretations even within the EU. So I think that's number one. Number two, it's something that kind of came from my academy as well, is that there is a tendency to think that Europe is just following the US approach. While... Yes, there is alignment with the United States, of course, but Europe really has its own priorities. And here we could say that there is a stronger emphasis on multi-territorialism, more caution about economic fallout and definitely different exposure to China. Jr (12:44) that I'm kind of thinking of, maybe you can help me with this, is Europe and all of the different member states were part of Wassanar. And Wassanar was sort of the, I think, the organization that brought it all kind of together. So it wasn't just US position. was each member had a chance to contribute their levels of control. So how are you seeing the Wassanar arrangement Anna Goncz (12:52) Mm-hmm. video. Jr (13:08) being challenged in this time. Anna Goncz (13:13) So I think the way we should look at it is Vasana, again it's something that once they change something in Vasana all... signed up members have to follow. But there is a nationality piece. if the country, regardless whether it's a European Union country or not, they can implement their own national security levels, a little bit like United States do. And that actually triggers the... the different controls across those countries slightly. And that's the same with sanctions currently. We have several countries within the EU that apart from following the general sanctions act and regulations from the EU, they also have some national acts that will implement, for example, additional entities that they want to control and prohibit from doing business. with. So I think Vazena, yes, it still remains a core, but I think once we look at the different countries we could find some additional controls. Jr (14:14) And where do you see the biggest member state divergence? Anna Goncz (14:19) So from interpretation point of view, Germany. And then from some national controls, Netherlands. Yes. Jr (14:30) Wow, so why do you think that is? Anna Goncz (14:33) I think we could say probably Germany is very conservative in their approach. And to contrary to that, Netherlands has a lot of movement of goods through Netherlands. So I think they want to make sure they control it in a way that, you know, not just a standard Vassna, but they want to make sure anything comes out from Netherlands that needs to be controlled for their national security, even if it's passing through, it's also, you know, somewhat handled. Jr (15:08) So let me see if I kind of got this. If I'm a company and I have presence in multiple member states, so let's say I have a factory in Germany, I have an R &D in Netherlands, I have some software development in France and so on. And so I have these multiple presence and so I'm moving goods in and out. Do I have to then look at each member state rule to see if it might capture what I'm doing? Anna Goncz (15:19) Yeah. Jr (15:38) Is that what you're telling? Anna Goncz (15:40) Correct. Overarching. And it's also the difference between whether it's a defense goods or whether it's the dual use goods. That's going to be a big difference. Generally, in terms of dual use, should be majority of them should be the same. In terms of. Jr (15:50) Okay. Anna Goncz (15:57) defence articles and this is something very important as well to mention is the difference in licensing between the two. You know, in terms of dual use goods within the European Union there is no licensing requirement, there is an exemption so it's a free movement between European countries. With the defence articles you need to get an authorisation from each government regardless whether you are in the European Union. to your point, if you are a company in Germany manufacturing for example something military and then you want to get military software from France, if you want to send that to Netherlands you will need an authorization from Germany and then authorization from France to be able to send it to Netherlands. Jr (16:49) Wow, that could make the role of a trade professional quite challenging. Anna Goncz (16:55) Correct. Jr (16:57) And I would think maybe that's why maybe you'd want to attend your academy. Anna Goncz (17:03) Correct, because that's one of the things we cover, ⁓ as well what's the licensing availability, how to look at the goods and sort of how to move them around, even Europe, depending as to what the goods are. Jr (17:04) All right. Right. So one of the things that we've been discussing in the last episode, I had an opportunity to discuss the future of trade and as a trade professional. And so if I look at what you're describing in Europe, I would think that a trade professional has to be not just up to speed on all the different rules, but they also have to be somewhat be a strategic thinker. Because I would think you have to strategically think about how are you going to manage these multiple jurisdictions and yet at the same time be able to move your goods expeditiously and with the right cost. Would that be a fair way to look at it? Anna Goncz (17:56) Yes, yes, I think, you know, I would say that that is maybe interesting. There is a big demand currently for export compliance, trade compliance, professionals in Europe, but there is still not enough experienced people. Jr (18:16) I see. Anna Goncz (18:17) So currently we see this increase companies advertising to get somebody who understands even or everything, sanctions, export controls and customs in one row. Jr (18:28) Mm-hmm. Anna Goncz (18:29) And my and don't get me wrong, they all come together as a trade and they all require it. since now, you know, we have sanctions per customs codes as well. So obviously that's important to understand. But I think you can't be specializing in all three. And I think this is something that needs to be really thought through. But I think this is a growing field rapidly. that it's good to be in. Jr (18:57) Right. That's not really good insight. Let's continue on this idea of operating in Europe. So let's say you're a US company now and you have EU subsidiaries. What are the biggest challenges those US companies face? Anna Goncz (18:58) Thank you. So I think the biggest ⁓ challenge still remains the overlapping jurisdictions. So you as a US parent may be thinking EAR terms, Deemed Export, De-minimus, FDPR, Entity List. Well, in EU, we will be thinking we need to comply with EU dual use regulations, national licensing practice, sanctions rules, maybe, like I mentioned, sometimes the member state measures layered on the top. And the hard part, I think, is that the same transaction can trigger both frameworks, US and EU at once. Jr (19:59) happens help me understand which one is the one you have to follow. Anna Goncz (20:05) So you need to follow both That depends very much as to whether product is a US origin, whether there is a US origin components, whether the finished product is actually subject to the US regulations. And this analysis needs to happen. But I think what we've seen in EU very often is the US centric trap, what I call it, where if you are having a US parent company, they do not understand that difference that, you know, EU is not extraterritorial as such. Yes, there will be probably if there is a US product subject to the US EAR in Europe already, you may need a re-export from US and also a license from a national authority to export it out from whatever country in Europe you are. So I think that is very complex and hard to understand sometimes. And I think that's still a biggest challenge for companies. Jr (21:00) Right. Do you see from your vantage point, do you see US companies avoiding doing business in Europe because of this? Anna Goncz (21:14) No, necessarily. I think it's other way round, to be fair. I think European companies try to avoid due to the restrictions. Jr (21:17) ⁓ okay. Anna Goncz (21:22) of, you know, like China now, very heavy restricted. European Union currently doesn't have such restrictions on China. So, you know, having a controlled product from your US in your final product that might be going to China, breaks the risk that you might not be able to either A, get the license or B, you might end up being punished by the US government because you exported something without the authorization. Jr (21:49) I see. Okay, so that's interesting. It is a challenge as a US company, and I assume as you said, as a European company trying to manage the US requirements that are extraterritorial make it difficult. So this then becomes the reason why you need good, well-trained export professionals to manage this. Yeah. Anna Goncz (22:08) Correct. Correct. you know, I want to say that today, you know, AI is advancing really fast. And yes, you can probably find a lot of information and they can help you. But the problem I see is, yes, you can have information, but how can you validate if you are not experienced or specialized in the field of export compliance, the information you get from any AI tool, whether it's chat, GPT, co-pilot, cloud, that is actually valid and true. And that's, think, the biggest issue right now. Jr (22:42) Right. Yeah, I've spent a number of episodes on that topic and it is a fascinating one. But let me just get your perspective on this as we're looking at this from the EU. know, one of the things that I'm recognizing today that there's two things in the world that just seem to dominate our attention. One is AI, right? And the other is trade. So they come together, right? And so as you're sitting in Europe and you're kind of Anna Goncz (22:47) Thank you. Okay. Jr (23:11) seeing how things are going. What is the current thought about using AI for export controls in Europe? Anna Goncz (23:19) So I think I can share something that there is many tools. currently increasing number of tools for ⁓ trade being developed. I've been exposed to few to sort of see how they work and what they offer and I must admit they getting better and better. Although one thing I keep saying they are great already for screening and giving you the information for entity screening, business partner screening, even the shareholder the structures. What they still not that good at it's the product classification and this is something because you need to have a proper data, master data in order to be able AI to giving you the right answers based on that data. And I think we as the bigger the corporations, the more chaos is in the data, obviously, because for many years they were collected in a ERP systems. But I think the main fact is that we, I'm not trusting them yet, per se. Jr (24:27) Okay, and are you seeing that across Europe or are people adopting them much quicker? Anna Goncz (24:33) I think there are some tools that are being adapted quickly, but still I think... you know, the biggest focus I think right now is on screening and customs. think customs is slightly easier to manage in that respect. I think still the export product classification is something that you really need to understand the technicalities behind it and they need to be correct. And you know, from my experience, there are many companies that have, you know, very old products. So the data are very fragmented. You may need to go ask engineers for some input as well. And that is not in the system. Jr (25:14) Yeah, I had a long conversation with ⁓ a woman, Angela, on how to manage data using the AI. And one of the things that we concluded was that at the end of the day, human beings need to really be in charge of this and to make sure that it's accurate and correct. The risks are too high to just kind of put the auto switch on and leave it, right? And so I think that's probably, as we look forward, that's probably going to continue to be important that there's some sort of oversight to make sure that things are accurate. Anna Goncz (25:45) Sure, and you know one thing to add to this, really from my perspective, this is why we need really trained people, because AI can help us dramatically to manage all the export compliance, but there needs to be somebody, a human being on the side who can say validate that, because I can't imagine the authorities will punish AI at all. It's going to be a company precisely. Jr (25:49) Mm-hmm. Right. Exactly. Yeah. No fines for the AI tool? Not yet. Yeah. No, it's fascinating times. think the whole topic of AI, how it relates to trade and in particular, export controls is going to be just an ongoing conversation. And I think there's still more to come as we go down the road here. So very, very exciting times. Anna Goncz (26:17) Not yet, at least. Jr (26:37) I want to go back to something you said earlier. you were talking the difference between the US and EU and so on. And in the United States, we have this deemed export rule. And this is a rule that requires companies to obtain export licenses if they transfer something that's controlled or sensitive to someone who's not a citizen. They're usually in the country as a temporary worker. So I don't believe that is true in Europe. how do companies deal with that requirement from the US side if they're operating in Europe? Anna Goncz (27:10) So that is correct. Deemed export is very much a US legal concept. doesn't exist in the EU as such. really the way we need to look at it, the deemed export for us in EU or for US, it's the release of controlled technology or source code to a foreign person, whether it's within the United States or whether it's the outside of the United States, it's the release of that technology. So there is few ways of handling it. But so one of it is you can obtain a re-export license, EA blanket license to cover the any nationalities that will have to have access within your company. for example, if you are a US company and you're sharing a controlled US technology with the EU subsidiary, the compliance analysis will not stop once file lands in Europe. The company needs to really ask who inside Europe will access the file. And if an engineer in an EU office is a national of a third country, meaning, I don't know, India, for example, that could be a deemed export, even though he sits in EU. So it's a very complex and it's also something worth mentioning. In EU, there is a GDPR rule, is the general data protection regulation. And that's something that also we need to be very mindful of because this type of concerns needs to go also in line of that regulation. So it can be very complex. So generally the best way is to either get a blanket license upfront, knowing who you will be sharing the technology with. Jr (29:07) Okay, so I think now, I'd like to kind of, as we kind of near the end here, I'd like to kind of look ahead and from where you're sitting and your vantage point, where do you see the EU expert control profession heading? Anna Goncz (29:19) ⁓ You know, this is one of the great questions that I... really exciting to answer because I think there is a big demand already and there will be a bigger demand for skilled professionals in this field and I think more and more see what's happening in the world and also with the fact that EU is trying to be more self-sufficient in terms of defense, in terms of supply chain. There will be some interactions with US still and I think This is going to be a core of any companies, the core position of any companies that is trading internationally. And it's regardless whether it's going to be a small, medium or big company. I think that needs to be now a part of general strategy because otherwise what can happen is if something goes wrong and you are not aware, you might lose completely ability to trade internationally. you Jr (30:17) Right. Right. Well, one of the things we're seeing in the United States is that the role of a trade professional is being elevated in the corporate structure. It used to be that, you know, the trade professional was off, you know, making sure things moved. And so now with all of the new U.S. requirements, whether they are the export side or the custom side, it's really elevating that role and its importance to even the C-suite. Anna Goncz (30:29) Okay. Okay. Jr (30:43) Are you seeing that same dynamic within European companies or is it still kind of the way it's been? Anna Goncz (30:51) It's a mix. So some companies, especially German companies, they have a structure that the export compliance is a part of the governance function and it sits close to the board of management as well. While other countries, think because they still now just realizing that the trade compliance is something that is growing. can give you an example. Poland is one of those countries where there is more and more export compliance exposure. And there is a mixture of still a little bit of operation, but now this moving slightly towards more governance. So I would say in the EU there is still mixture of both, but I can definitely see some turn that in some countries this is already same as in the US. It's a part of the governance structure. Jr (31:41) I see. Okay. So let's imagine for a second, I'm just out of school, I'm starting my career, I really like this trade, it looks very interesting. So how does one get started? Anna Goncz (31:57) You need to join the Export Compliance Academy. Jr (32:00) Okay. Anna Goncz (32:00) and follow me on LinkedIn, no I'm joking, that's a fair point. And that's something I also would like to ⁓ introduce to people because I think we have a mixture of people out there who either have had some exposures or not spoke controls but doesn't understand it really and they are complete beginners. And searching around as to what's available, there are being some universities in EU that provide but it's trade compliance so it includes very much everything meaning sanctions, customs, duties and all that. So I think what you need to do is whether you're studying towards that already you can maybe try to get some internship in that role to follow somebody see whether you really like it because I remember in my my career where we had an internship back in the UK and bless her, the girl was out of the law studies and she hated it. She hated export controls. So, you know, it's not for everybody and I think you need to try it first. So I think internship is something you could do. But I also think before you commit to, I don't know, study further the trade compliance, try to find some courses, the basics ones, you know, I did joke about the export Compliance Academy but this is something I would really say it could be a starting point to see whether actually I would like that to do. Jr (33:27) Okay, so for those who would like to learn under you, under your academy, they just, where do they go? Anna Goncz (33:35) So you can visit me on my LinkedIn page, Anna Goncz, and there is a link to the academy where you can read all the details and just basically click there and see what's inside. Jr (33:50) Okay, that's great. I hope that folks will take advantage of that. One last just question, because we're talking about, you know, people that are working in this profession and as we look forward, what do you think in this kind of changing world, what do you think are the skills, the unique skills or mindset that really need people, trade professionals need to develop as they go forward? Anna Goncz (34:16) So I think number one is being flexible to change, meaning that they're rapidly changing regulations. They can change from one day to the other. You need to be ready that that can happen and be sort of flexible in that respect that you need to, if you're working in the company, you might have to analyze whether there is any impact on the operation and advise business as soon as possible. So that's one thing. I think second skill is the of the strategy. strategic overview because you're probably going to be the one who will need to analyze which regulations, which jurisdictions might apply in the particular company. you know, you need to be a little bit like a detective to sort of be curious and inspired and be motivated to sort of go, you know, and start to look for things even if they don't appear obvious. Jr (35:14) Right. Good advice. So before I kind of conclude this episode, any last thing that you'd like to share, Anna, any words of advice or any thoughts that you want to that you didn't get a chance to talk about? Anna Goncz (35:29) I just want to say that export compliance and sanctions, once again, it's a very fast and growing field and it's not often heard of. Sanctions are probably more heard of than export controls, but they are very much connected. So if you are really interested in that field, go for it because it's going to grow and AI will not replace it for sure. Jr (35:54) Well, that's good. That's good to hear. Well, thank you, Anna. As we close this conversation with Anna, I want to step back and look at the narrative we've created over the last several of my episodes. Back in episode 26, I met with Bas Souti, the CEO of Sustain360, and he walked us through how AI, including agentic AI and sovereign AI are reshaping the systems we rely on to manage the supply chain. And this includes cross-border trade. Then in episode 27, I met with Angela Aaron, who's from ClearNow, and she emphasized the importance of data in this new world of trade and AI. She explained the foundations, the risks, and the responsibilities that come with modernizing the trade profession. Then in episode 28, I had Bruce Jackson and Karen Murphy help us kind of zoom out even further. And in part one of that episode, we made the diagnosis, you how is the role of the trade professional changing? You know, why the old playbook no longer works and what today's demand. And then we got to part two and this was where we looked at the prescription. We talked about the skills and the judgment and the leadership mindset that the next generation will need. And then today with Anna, we added another important piece in global trade, the European lens. This is a view from the inside, a system that's moving fast, coordinating differently and increasingly shaping the global rule book on export control. If you put all this together, these four episodes tell a single story. The trade profession is evolving globally. The work is more technical, it's more strategic, and it's more interconnected than ever before. And the people who will lead it are the ones who can see across these systems, whether it's EUS, EU, the technology, the AI tools, the data, and of course the human side of the work. Thank you for listening today. And I hope if you have not already done so that you will check out the other episodes that describe this new world of trade. And I wanna also thank you, Anna, for joining me today and for giving us such a wonderful insider perspective on what's a very complex regulatory environment, know, the export controls in Europe. And so I really appreciate all of your insights and thank you for joining. Anna Goncz (38:52) Thank you, Jeff, and thank you for this opportunity that I could share with anybody that listening, the inside view of the European export controls and what the role in Europe involves. Jr (39:05) Great, thank you. Well, this is Jeff Rittner and you've been listening to Rittner Reflections, a forum for exploring the dynamic, complex, and essential nature of cross-border trade. And a space to reflect on the deeper questions that shape how we live, lead, and move through uncertainty. For my next episode, I will record solo and I will share some exciting personal stories about what I've been up to lately. Until then, talk to you again soon. Take care.