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What is export compliance? Essentially, it’s following U.S. laws that govern international trade. For exporters, this means dealing with complex regulations that vary greatly from one product to another. These rules are crucial, but following them isn’t easy due to their level of detail and changing nature.
The U.S. Bureau of Industry and Security dictates that export compliance involves adhering to laws regulating the shipment of goods and technology from the U.S. to foreign destinations. These laws ensure trade security and legal conformity from exporters based in the United States.
If you’re an exporter concerned about compliance, we’re here to help. This guide will lay out what compliance is and the best ways you and your business can maintain it.
Export compliance includes any practices and actions a business uses to ensure it is following the rules and regulations governing the exportation of goods from the U.S. It’s not only a simple matter of being properly registered and licensed.
Some responsibilities of an exporter include:
To get started becoming export compliant, we’ll help you become familiar with several key agencies. Each one has some involvement in the import and export of goods in the U.S.
Learn more about products subject to export control here.
Export control laws cover a variety of products, so multiple agencies are involved in compliance. Some of the most influential include the following.
Each agency has a hand in crafting the regulations and ensuring they’re followed. They shape the way U.S. businesses take part in global trade.
If you’re in the export business, you need an export compliance program. Without one, your business can easily lose direction and face punishing penalties and fines.
For an idea of how serious these consequences can be, take a look at these statistics from 2021.
| Civil Penalties | $9,822,653 |
| Restitution | $3,149,782 |
| Forfeitures | $2,368,452 |
| Criminal Fines | $2,798,000 |
| Prison Time | Over 93 years |
Source: bis.doc.gov
With a compliance plan in place, you’re far less likely to incur one of these punishments. Let’s examine the steps of export compliance, including how to audit your plan.
An export compliance program is a company’s blueprint for international commerce. It should lay out a step-by-step process for compliance checking that anyone involved in your export transactions can easily follow. Without one, it’s not hard to violate export controls.
Your needs will vary based on products or services you offer. However, when drafting a thorough export compliance program, focus on the following steps.
These steps are a starting point. Compliance experts can help you tailor these steps to your business’s needs. Adhering to these steps can safeguard a business against violations and the resulting penalties.
During an audit, you’ll see if your company is following regulations governing the export of goods. This process is crucial for identifying risks and avoiding citations.
Here’s a checklist of steps generally involved in an export compliance audit:
Following these steps is important to ensure a successful audit. They help identify areas where an exporter may be at risk for non-compliance and where improvements can be made.
Why go through all the trouble of meeting export compliance rules in the first place? Simply put, failure to do so leads to financially devastating fines and, in some cases, prison time. The BIS takes national security and the state of the U.S. economy seriously. Without these rules in place, dangerous items can land in the wrong hands.
Let’s take a closer look at where the buck stops for export compliance, and the punishments that come from failing to be export compliant.
The exporter of record if responsible for export compliance. Most of the time, this is the individual undertaking the exporting venture. It’s their responsibility to make sure paperwork is filled out properly and that no violations of BIS regulations have occurred.
Simply put, whoever benefits most from the transaction will be the exporter of record. Even if you work with a broker or freight forwarder, compliance is the exporter’s responsibility.
Learn more details about who qualifies as an exporter of record here.
Export compliance violations come in many forms. Even minor oversights can have damaging consequences for businesses.
Here are some of the most common violations encountered by U.S. exporters:
The consequences of compliance issues range from administrative headaches to serious legal and financial damages, including:
These penalties make it clear that following export compliance regulations isn’t just a legal requirement, but also a critical component of business risk management.
Understanding the difference between EAR and ITAR is crucial for compliance with U.S. export laws.
The key details of these regulations are as follows.
Learn more about the details of ITAR and EAR compliance in our detailed article.
If you’re unsure whether your cargo falls under EAR or ITAR, find out before filling out any shipping forms. Failure to accurately classify your export can lead to severe penalties. This potential risk highlights the importance of working with export compliance specialists.
For exporters in the U.S., an export compliance specialist can be a difference maker. These experts in U.S. cargo export regulations work with businesses to avoid fines and delays.
Export compliance specialists can also assist exporters with the creation of compliance manuals. Having such a manual is an important step toward following the complex regulations governing the export of U.S. goods.
Export compliance is expected from all exporters based in the USA. Unfortunately, the BIS doesn’t go out of its way to make complying an easy process. If you’re unsure about your export compliance status, we can help.
Cargo Export USA offers assistance with several aspects of exporting, including:
Take control of your export enterprise. Give us a call at (866) 301-0635 or contact our agents online today. We have the know-how you need to ensure consistent export compliance.
