Exporting goods from the United States involves navigating complex regulations to ensure compliance and avoid costly penalties. One critical set of regulations every exporter should be familiar with is the Export Administration Regulations (EAR). We talk with many new exporters at Shipping Solutions, and one of the first mistakes they make is assuming they don’t need to worry about export controls because they’re not shipping a dangerous item. However, this isn’t always true.
The EAR applies to a broad range of items beyond just weapons or hazardous materials. This guide will help you understand what the EAR encompasses and how it might affect your exports, ensuring that you remain compliant and avoid potential penalties.
What Is the EAR?
The Export Administration Regulations (EAR) are a set of regulations administered by the Bureau of Industry and Security (BIS), a part of the U.S. Department of Commerce. The EAR governs the export and re-export of most commercial items, including “dual-use” items and goods that are not controlled by other regulations (the International Traffic in Arms Regulations or the Office of Foreign Assets Control, for example). Dual-use items are those that have both commercial and military or proliferation applications. Exporting anything subject to the EAR may require a license from BIS before shipment.
If you need help determining who has jurisdiction over your items, read our article Determining Export Controls Jurisdiction and Classification: ITAR and EAR Order of Review or check § 734.3—Items subject to the EAR.
Key Components of the EAR
Commerce Control List (CCL)
The CCL is a detailed list of items, organized into 10 categories and five product groups, that are subject to the EAR. Each item on the CCL is assigned an Export Control Classification Number (ECCN), which determines the level of control and licensing requirements.
Deemed Exports
The EAR also covers deemed exports, which occur when technology or source code is released to a foreign national within the United States. This can happen through various means such as visual inspection, verbal communication or electronic transmission.
License Exceptions
The EAR includes several license exceptions that allow exporters to ship items without an export license under specific conditions. Common exceptions include items for temporary exports, items for repair and replacement, and certain low-value shipments.
Destination-Based Controls
Export controls vary based on the destination country. The EAR includes a Commerce Country Chart that specifies the controls applicable to different countries. Exporters need to consult this chart to determine if a license is required for their destination.
End User and End Use
Who will ultimately use your product and for what? The EAR may restrict exports to certain types of end users, such as military or government entities, and for certain uses. Exporters need to ensure their items aren’t diverted to prohibited end users or for prohibited end uses.
Steps to Ensure Compliance with the EAR
1. Classify Your Item
Determine if your item is subject to the EAR by checking if it is listed on the CCL. If it is, identify its ECCN. You can search for an ECCN code in a printed copy of the EAR or online at the BIS website. In addition, Shipping Solutions Product Classification Software allows you to search for the correct ECCN code by typing in a short description of your product.
Products that do not have an ECCN and are not subject to control by any other U.S. agency are designated EAR99. Products classified as EAR99 are low-technology consumer goods and usually do not require an export license. However, even EAR99 items require licenses for exporting to embargoed countries, to a restricted party or in support of a prohibited end-use.
2. Check the Destination
Review the Commerce Country Chart to see if your item requires a license for the intended destination. Pay special attention to embargoed or sanctioned countries, which have stricter controls.
3. Screen Your Customers
Conduct due diligence on your customers and end users. Restricted party lists (also called denied party lists) are lists of organizations, companies or individuals that various U.S. agencies—and other foreign governments—have identified as parties that one cannot do business with. Exporters must perform restricted party screening of all parties in each transaction, which means checking more than 140 lists. Rather than checking each of these lists individually, Shipping Solutions Restricted Party Screening Software makes it easy for you to check all these lists at one time from any web browser. The information is kept up-to-date so you are always accessing the most current information. Try it for free!
4. Apply for a License if Necessary
If your item and destination require a license, submit an application to BIS. The application process can take time, so plan accordingly to avoid delays in your shipments. If you need help understanding this process, download our free whitepaper, How to Determine if You Need an Export License.
5. Use License Exceptions
An export license exception is a reason why you may not need an export license for a shipment that would normally require a license. There are several types of license exceptions, each defined by a three-letter abbreviation. When looking for your product’s ECCN, potential license exceptions will be listed in the CCL entry. For a list of all the export license exception codes and what they mean, see our article, What You Need to Know about Export License Exceptions.
6. Maintain Records
Recordkeeping is crucial for demonstrating compliance in the event of an audit. So you’ll want to document each of the steps above to show that you have done your due diligence.
For More Help with Export Compliance
By familiarizing yourself with the key components of the EAR, classifying your items correctly and conducting due diligence on your customers, you can ensure your international shipments are compliant. When in doubt, seek guidance from export compliance experts or let us show you how Shipping Solutions can help. Our software makes sure all of your export documents are done right, and it also includes an Export Compliance Module with three important tools: restricted party screening, export license determination and document determination. We’d love to show you how it works!
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