Imagine for a moment that you're an engineer somewhere out in the big chunk of this planet not known as the United States, working on a international telecommunications project.  Part of the effort extends into a country on the US Department of State's list of state sponsors of terrorism.  Now, let's make a big assumption here and figure in (a) that you've actually heard that US export controls can extend to reexports of US-origin items from one foreign country to another and (b) that, for whatever reason (fear of penalty, general corporate conservatism, affinity for US foreign policy (hah!), etc.) you give a damn.

One of the first things you might do is attempt to design US products out of your solution and seek comparable non-US alternatives.  So, continuing in our telecom example, rather than going with Cisco, Lucent, or Motorola, you look to Ericsson, Alcatel or Siemens.  These European firms are happy to supply you with their products, most of which aren't on the European Union's dual-use export control list in the first place.  Your procurement efforts complete, you've now disposed of any US export compliance issues, correct?

Well, actually no -- that's the hard lesson Korea Telecom (KT) recently learned.

The Korea Times reports that South Korean efforts to hook up a North Korean city to the South's telephone grid are delayed pending US export approval.  The North Korean city of Kaesong, best known to Americans as the site of the armistice negotiations that eventually put a halt to the Korean War, is the location of a planned cooperative North-South industrial site.  The KT managers knew enough to avoid dealing with US manufacturers, but ran into problems when their European suppliers got queasy.

That's because their products, even though they are made outside the US, include some US-origin components.  And the US asserts export control jurisdiction over even foreign-made commodities if they are over 25 percent US content by value.  That threshold is lowered to only 10 percent when the destination is a designated terrorist-supporting state like North Korea.  So if KT wants to send to Kaesong that switch built by France's Alcatel in Malaysia, but with a relatively high value chip made in the US, then they need to apply to the US Commerce Department for a license to do so.

The more you think about this rule, the more the scope of it really takes your breath away.  It's an incredibly wide net American policymakers are casting here.