The United States’ largest export market in the world—450 million wealthy consumers—is not just a single country, but the 27 member states of the European Union (EU). In this article, I’ll look at the history of U.S. trade with the European Union; the process of exporting to the EU, including documentation and compliance requirements; and the benefits and considerations for U.S. companies looking to break into the EU marketplace.
U.S. Trade Representative, U.S. goods and services trade with the European Union totaled an estimated $1.3 trillion in 2022. In 2023, U.S. goods exports to the European Union were $368.57 billion. Leading services exports from the U.S. to the European Union were in the professional and management services, intellectual property, and financial services sectors.
Exporting to the EU: The Challenges
The European Union continues to move in the direction of a single market, but U.S. exporters continue to face barriers to entry and challenges with the fragmentation of regulations, testing and standards at the Member State level. In some industries, including information technology, pharmaceuticals, chemicals, telecommunications, legal services and government procurement, trade barriers are more pronounced.
Other challenges for exporting to the EU include the following:
- Across many sectors, more protectionist measures may be introduced in the name of a more strategically autonomous economic union.
- EU legislation and regulations can be complex. Regulations contain mandatory language and are directly and uniformly applicable to all Member States when that regulation comes into effect. Directives provide a general framework, set regulatory objectives and must be transposed into national legislation at the Member State level. As Member States have different legal systems and regulatory practices, there are differences in how directives are implemented, which complicates compliance for U.S. companies doing business in the European Union.
- There is complexity between the EU and its member states in who oversees what.
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- The EU has exclusive competences in the areas of the customs union, establishing the competition rules, the monetary policy for area countries, conservation of marine biological resources and the common commercial policy.
- The European Union shares with its Member States the competence for legislative harmonization, which it exercises in areas such as the free circulation of goods, services, capital, and in such sectors as agriculture, fisheries, transport and energy.
- Health, tourism and civil protection are examples of areas where the European Union can legislate only in support of Member States’ initiatives.
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Despite these barriers, U.S. exporters of all sizes can absolutely be successful in the EU market with careful planning and assistance from agencies like the U.S. Commercial Service. Discussions are ongoing between the U.S. and the EU, specifically about improving transparency in developing regulatory procedures and standards. U.S. trade agencies, including the U.S. Department of Commerce, continue to work closely with the business community to ensure that the European Union and its Member States comply with their bilateral and multilateral trade obligations and to address market access problems affecting U.S. firms.
U.S. Commercial Service Offices
One of the first places to consider are your local and in-country U.S. Commercial Service offices. Commercial Service in-country offices effectively serve as your business partners in the EU—boots on the ground in the country. Commercial service offices also include representation by an agent, distributors or partners who can provide essential local knowledge and contacts that are crucial to your success.
You can learn more about in-country offices in our article, Tapping into the U.S. Commercial Service’s In-Country Offices.
District Export Councils (DECs)
DECs across the country help exporters by supporting trade and services that strengthen individual companies, stimulate U.S. economic growth and create jobs. DEC members also serve as mentors to new exporters and provide advice to smaller companies.
Sponsored by state and local trade offices as well as commercial service offices, trade missions offer introductions to important contacts and networking opportunities. Check into them.
International Trade Administration
The ITA is an excellent resource to help you combat trade problems. ITA staff members are resident experts in advocating for U.S. businesses of all sizes. They customize their services to help solve your trade dilemmas as efficiently as possible. Plus, the ITA makes it easy to report a problem, allowing you to submit your report online.
Chambers of Commerce
Chambers of Commerce may also be a resource when exporting to the EU. You can learn more about various chambers and how they can help smooth the way for your export activities in our article, The Chamber of Commerce Role in Exporting.
Export Document Requirements for the EU
Accurate export documentation and attention to procedures are as critical in exporting to the EU as they are for exporting to any other country. An import license is not needed to import the majority of industrial goods into the EU; however, some industrial goods require import licenses issued by the Import Licensing Branch (ILB) as a result of controls imposed at national, EU and United Nations levels.
Documents you’ll need to export to the European Union from the U.S. will vary depending on your products but may include:
* If a U.S. company wishes to submit a customs declaration, they must have an Economic Operator Registration and Identification (EORI) number, which they can request from the EU Member State to which they first export. Once a company receives its EORI number, it can use it for exports to any of the Member States.
Export Compliance Issues When Exporting to the EU
It’s important to understand the regulations covering exports to the EU, especially export controls.
Product Classification for Export Controls
The first step in ensuring export compliance is determining who has jurisdiction over your goods: the U.S. Department of Commerce under the Export Administration Regulations (EAR) or the State Department’s International Traffic in Arms Regulations (ITAR).
If your goods fall under the jurisdiction of the Commerce Department—which most products do—you must determine if your export requires authorization from the Bureau of Industry and Security (BIS, part of the Commerce Department). To make that determination, first answer the following questions:
- What is the Export Control Classification Number (ECCN) of the item?
- Where is it going?
- Who is the end user?
- What is the end use?
There are three ways to classify your products for export controls: You can self-classify your products, submit a SNAP-R request for a ruling, or rely on the product vendor to provide the information. Learn about that process in our article, Export Codes: ECCN vs. HS, HTS and Schedule B. By classifying your product correctly, you’ll be protecting yourself from potential fines, penalties and even jail time.
Export License Determination
Next, companies must use the ECCN codes and reasons for control described above to determine whether or not there are any restrictions for exporting their products to specific countries. Once they know why their products are controlled, exporters should refer to the Commerce Country Chart in the EAR to determine if a license is required.
Although a relatively small percentage of all U.S. exports and re-exports require a BIS license, virtually all exports and many re-exports to embargoed destinations and countries designated as supporting terrorist activities require a license. Countries fitting that bill are Cuba, Iran, North Korea and Syria.
Part 746 of the EAR describes embargoed destinations and refers to certain additional controls imposed by the Office of Foreign Assets Control (OFAC) of the Treasury Department.
Shipping Solutions Professional export documentation and compliance software includes an Export Compliance Module that uses the ECCN code for your product(s) and the destination country to tell you if an export license is required. If indicated, you must apply to BIS for an export license through the online Simplified Network Application Process Redesign (SNAP-R) before you can export your products.
There are export license exceptions, like low-value or temporary exports, that allow you to export or reexport, under stated conditions, items subject to the Export Administration Regulations (EAR) that would otherwise require a license. These license exceptions cover items that fall under the jurisdiction of the Department of Commerce, not items controlled by the State Department or some other agency.
Deemed Exports
Surprise! You may be an exporter without even knowing it! Deemed exports, or the disclosure of information or services rather than an actual product, is an important issue to pay attention to when exporting. A deemed export occurs when technology or source code (except encryption and object source code, which is separately addressed in the EAR under 734.2(b)(9)), is released to a foreign national within the United States.
Sharing technology, reviewing blueprints, conducting tours of facilities, and other information disclosures are considered potential exports under the deemed export rule and should be handled accordingly. You can learn how to apply this principle here.
Restricted Party Screenings
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 can’t do business with. There are several reasons why a person or company may be added to a restricted party list. For example, they may be a terrorist organization or affiliated with such an organization; they may have a history of corrupt business practices; or they may otherwise pose a threat to national security.
Restricted party screening (or denied party screening) refers to the process in which a company checks a potential customer or business partner against one or more of the restricted party lists to ensure their potential partners are legally accepted. The primary restricted party lists in the United States are published by the Department of Commerce, Department of State, and Department of Treasury. However, several other agencies produce lists as well. These agencies recommend that companies perform restricted party screening periodically and repeatedly throughout the movement of goods in the supply chain.
When exporting to the EU, it’s imperative you check every single restricted party list every time you export because:
- Fines for export violations can reach up to $1 million per violation in criminal cases (Bureau of Industry and Security).
- Administrative cases can result in a penalty amounting to $250,000 or twice the value of the transaction, whichever is greater.
- Criminal violators may be sentenced to prison for up to 20 years, and administrative penalties may include denial of export privileges.
Export Documentation and Compliance Software
If you’re considering exporting to the EU, Shipping Solutions export documentation software can help you quickly create the necessary documents and stay compliant with export regulations. Register for a free demo of Shipping Solutions software to see how it will revolutionize the way you’re currently creating your export paperwork.
This is one in a series of articles exploring exporting to specific countries across the globe—we previously featured China, the United Kingdom, Japan, Mexico, Canada, India, Brazil, Germany, France, and the Netherlands.
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