Copy URL to Clipboard
If you’re new to the world of exporting, gaining a solid understanding of export control basics is imperative if you want your shipments to leave the country successfully. Unfortunately, export controls are a complex part of the exporting process and many U.S. exporters struggle to understand it.
According to the Bureau of Industry and Security (BIS), export control basics are described as the laws and regulations regarding the transfer of goods, software and technology to other nations. These laws and regulations comprise the Export Administration Regulations (EAR), which the BIS implements.
Once you have an understanding of export control basics, you’ll be able to send goods to other countries while maintaining compliance with EAR and by extension, the BIS.
As we explained above, export controls refer to the laws and regulations placed upon the transference of goods, software and technology to foreign nationals. This includes foreign nationals located within the U.S. and foreign countries alike.
There are numerous purposes that export controls serve, but some of the primary ones include the following:
To fulfill these purposes, export control regulations restrict the exportation of certain goods outright or by restricting certain goods under certain circumstances. In some instances, U.S. export control regulations will require you to fulfill certain criteria such as fulfilling export license requirements to export your goods.
If you find this article helpful, you might find our exporting to Japan article useful as well.
The U.S. Department of Commerce, through its BIS department, is responsible for overseeing and enforcing the U.S. export control laws in regulations found in the EAR. Specifically, EAR regulates exports, reexports and the transfer of items that can be used for both commercial and conventional arms purposes. When goods that are regulated by EAR are exported, the Export Administration (EA) reviews them to make sure that they’re up to par.
The CCL stands for the Commerce Control List and it contains numerous items that the BIS regulates. If you’re unsure whether or not the items you’re exporting need a license from the U.S. Department of Commerce, you should consult the CCL. This list contains 10 categories and five product groups, each of which has various items belonging to them.
The 10 categories on the CCL are as follows:
CCL’s five product groups include the following:
Each item that is part of the CCL has its own Export Control Classification Number (ECCN). The ECCN gives a description of the item that corresponds with it and states the licensing requirements that you’ll need to follow. That said, there are also certain goods on the CCL that won’t need licensing either.
If you’re exporting goods that do fall under the U.S. Department of Commerce’s jurisdiction but haven’t been listed on the CCL, then it will have the designation “EAR99” given to it. Goods with this designation typically don’t need a license to accompany them.
Exporting to Canada will also require you to follow certain export controls as well.
As we noted above, not all items listed in the categories and product groups of the CCL need an export license. To determine whether or not your exported item will need to be accompanied by a license, you’ll need to consider the following:
Under most circumstances, you won’t need to provide an export license when you ship freight to another country. That said it’s good to consider these questions just in case your freight might be eligible.
The ECCN that corresponds with the goods you’re trying to export will discern whether or not you need an export license. That said, if you find that the ECCN for your goods doesn’t say you need an export license or if your freight is classified as EAR99, there could be other circumstances that might require you to obtain a license.
Goods that commonly have a dual-use application, such as aircraft parts, will usually have an ECCN designation.
Another factor that determines if your controlled items or controlled information will need an export license is where your exported shipment will be traveling to. The way to determine if your exported goods need to have a license based on the destination they’re going to is by doing the following:
Based on the export controls dictated by the ECCN and the parameters discerned by the country commerce chart, you’ll be able to figure out if your export will need a license accompanying it.
Always check with nations individually for lists of banned imports. Some nations, such as Saudi Arabia, have very specific lists that are strictly enforced.
The person receiving your exported shipment can also have an impact on whether your goods will need to have an export license or not. There are certain foreign persons and entities that aren’t permitted to receive exports. Some foreign importers might need to receive an import license from their own country to receive your export.
Lastly, what your exported shipment will be used for also has an effect on licensing needs for your shipment. There are many goods with ECCNs that don’t require a license under most circumstances. However, depending on what those products are used for, you might be required to provide a license.
For example, EAR99-classified goods usually don’t require an export license. That said, if the EAR99-classified supports prohibited end-use, you may need to obtain an export license under those circumstances.
To enforce export control regulations, the BIS has two different resources at its disposal. These two resources are the Office of Export Enforcement (EE) and End-Use Checks (EUC). Firstly, EE works closely with the following entities to ensure that all regulations outlined in EAR are strictly followed.
EUCs are tests conducted by Export Control Officers working for BIS. The way that Export Control Officers conduct these tests is by making on-site visits with end-user, consignees and other parties involved in an international transaction of goods regulated under the EAR.
The U.S. Department of Commerce through the BIS is the primary government agency that oversees export controls. That said, the U.S. Department of State, via the Directorate of Defense Trade Controls (DDTC), oversees export controls as well. DDTC focuses more on articles and services meant for military application.
Just as BIS uses EAR to regulate exports, the DDTC uses the International Traffic and Arms Regulations (ITAR) to govern exported defense articles. The DDTC has its own export control lists of the items that they each regulate. This is called the United States Munitions List.
As the name implies, the United States Munitions List or USML is a list that contains defense articles or services that have the following attributes:
Any of the items that are found in the USML have no civilian use applications. Items that are on the USML are broken down into categories, similar to the CCL. There are about 21 different categories of articles or services with military applications within the USML.
If you’re exporting to Mexico or Canada, our article on the benefits of USMCA will help you out.
Not following export control rules and regulations can be very costly. Some of the penalties you can incur for criminal and administrative monetary penalties are reflected below.
| Criminal Penalties | Up to 20 years imprisoned and $1 million in fines |
| Administrative monetary penalty | Up to $300,000 in fines |
Every seller starting an export business or already has one should keep these penalties in mind. In addition to these violations, there’s a possibility that you could lose your export privileges from the BIS.
Comprehending export control basics and meeting all the requirements when you send goods outside the country can be challenging for any exporter. Fortunately, you don’t have to fulfill these requirements on your own. At Cargo Export USA, our team of export consultants will be able to assist you throughout the process.
Our consulting sessions allow you a perfect opportunity to ask questions and learn as much as you can about export control basics. In addition to our consulting sessions, we offer other services that you might find useful:
We make it our goal to ensure that you’re successful in your exporting endeavors, regardless of what products you’re sending. Call our team at 866-301-0635 for more tips or get started with our services today.
