Steps to Comply with the Export Administration Regulations (EAR)

Last Updated: November 2018

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There are two primary regulatory bodies that administer U.S. export control laws for defense or military-related products, services, and technical data.
The Department of State via the Directorate of Defense Trade Controls (DDTC) administers the International Traffic in Arms Regulations (ITAR), which controls items considered defense articles, services, and technical data.
The Department of Commerce via the Bureau of Industry and Security (BIS) administers the Export Administration Regulations (EAR), which controls purely civilian items, items with both civil and military, terrorism, or potential WMD-related applications, and items that are exclusively used for military applications but that do not warrant control under the ITAR.
Licensing and other export certification requirements for exporting a military-related product (or service), are dependent upon the item’s technical characteristics, the destination, the end-user, and the end-use. You, as the exporter, must determine whether your export requires a license. When making that determination consider:
What are your products or services?
Where are your products and services going?
Who will receive your products and services?
What will your products or services be used for?

  

It is important to note that a defense product, service, or related technical data cannot be regulated both by the DDTC and the BIS. However, it is possible for a product or service to be regulated under the DDTC or the BIS and under another agency like the Treasury Department, the U.S. Nuclear Regulatory Commission, the Department of Energy, the Patent and Trademark Office, or the Department of Defense.


To fully comply with the EAR and the BIS, complete the following steps:
 
STEP #1
 
You can use the Commerce Control List (CCL) to determine whether your products or services are regulated under the EAR. If your products or services are listed on the CCL, then you are required to use the applicable Export Control Classification Number (ECCN) and the Commerce Country Chart to determine whether your product or service needs a license based on the product and the destination country (see step #2).
 
a. If your product or service is not on the CCL it may still fall under EAR jurisdiction, but due to the type of product or service, it does not require a license. These products and services are classified as EAR 99; products and services that typically receive this type of classification are commercial goods and purely civilian goods and services.  
 
b. If your product or service is not on the CCL and is not classified as EAR 99, it may still require a license based on the country, company, or individual that you are doing business with or who ends up with the products.
 
i. The Department of the Treasury via the Office of Foreign Assets Control (OFAC) administers and enforces sanctions against foreign countries, people, and organizations. A license from the Department of Treasury may be required if you are exporting to an OFAC restricted country. For more information visit the OFAC Resource Center page.
 
ii. Several agencies publish lists that identify persons, businesses, organizations, and other groups to which trade is restricted or prohibited. To determine whether your product or service requires a license based on who will receive your item or who the end-user is, it is recommended that you visit the BIS How Do I Avoid Dealing with Unauthorized Parties page for more information.
 
c. If you are unable to determine whether your product or service is on the Commerce Control List, you can submit a commodity classification request online through the Simplified Network Application Process - Redesign (SNAP-R). You must obtain a Company Identification Number (CIN) before accessing the online SNAP-R system and submitting your request.
 
d. Guidance on Reexports and Transfers (in-country) of U.S. Origin Items or Non-U.S. made Items subject to the EAR can be found on the Guidance on Reexports page of the BIS website.

STEP #2

If your product or service is classified under an ECCN on the CCL, then you must use the Commerce Country Chart to determine whether your product or service requires a license.
 
a. A description of an ECCN on the CCL will include a list of controls that apply to the export of the specific product or service. These controls are for one or more of the following: Chemical & Biological Weapons (CB), Nuclear Nonproliferation (NP), National Security (NS), Missile Technology (MT), Regional Stability (RS), Firearms Convention (FC), Crime Control (CC), or Anti-Terrorism (AT). Once you identify the controls listed in the description of the ECCN for your product or service, then you use the Commerce Country Chart to determine whether the controls apply to your destination country.
 
b. Listed on the Commerce Country Chart are all possible destination countries. Next to a specific country, there are several boxes and each box represents a possible control that restricts exports to that country.  If an “X” is found in a box, then exports are controlled by the BIS to that country based on the corresponding reason for the control. You must check the boxes of your destination country that correspond to the reasons for controls listed in the description of the ECCN for your product or service. If an “X” is found in at least one of the boxes, then an export license is required.
 
c. License exceptions may be applicable based on the product and the destination country. It is recommended that you review the license exceptions in Part 740 of the EAR to ensure you meet all of the criteria for an exception.
 
Below is an example on how to use the Commerce Control List and the Commerce Country Chat:
 

A Maine business is looking to export a non-military drone from Maine to Morocco.

Step #1: First the business must identify the correct ECCN for the product. After looking at the Commerce Control List, the correct classification is “Remotely Piloted Vehicles (RPVs), non military” and its ECCN is 9A012. On the commerce control list in the description of ECCN 9A012, a table is found that lists the reasons for controls on this product and potential license exceptions. 
 
Control(s) Country Chart
NS applies to entire entry NS Column 1
MT applies to non-military Unmanned Air Vehicle (UAVs) and Remotely Piloted Vehicles (RPVs) that are capable of a maximum range of at least 300 kilometers (km), regardless of payload, and 9A012.b.5 MT Column 1
AT Applies to entire entry AT Column 1
List Based License Exceptions (See Part 740 for a description of all license exceptions)
               LVS: N/A
               GBS: N/A
               CIV: N/A
 
Step #2: After identifying the ECCN, the Commerce Control List indicates that there are certain license requirements for exporting this product. In this case, license codes NS and AT apply for all non-military drones and MT applies to a specific type of non-military drone. NS, AT, and MT are separate reasons for the controls. NS stands for National Security, AT stands for Anti-Terrorism, and MT stands for Missile Technology.
 
Step #3: The Commerce Country Chart must now be used to determine whether or not a license is required for the export of ECCN 9A012 (non-military UAVs) to Morocco. Note that NS Column 1, MT Column 1, and AT Column 1 are specified under the controls, this is for use on the commerce country chart.  Below is a snapshot from the commerce country chart.
 

 

Step #4: For this item and destination country example there is an “X” in the box in NS Column 1 and MT Column 1 and there is no “X” in the box in AT Column 1. This means a license is required for the export of non-military drones to Morocco for reasons of National Security and Missile Technology but not for Anti-Terrorism (unless we were exporting a drone that had a capable maximum range of at least 300km, then controls for Anti-Terrorism would apply as well).

DIME can help you identify ECCNs for your products and help you determine whether or not a license is required for your defense or military related exports. Contact us today for more assistance. 


STEP #3

Once you have determined that the export of your product or service is regulated under the EAR and requires a license, you can use SNAP-R to submit an export license application.
 
a. To better serve the exporting community, BIS has launched an on-line version of its System for Tracking Export License Applications (STELA). You may now check the status of your export/reexport license applications, classification requests, and other notifications using the STELA Tracking page. Applicants must input their BIS assigned application control number(s) (ACN).
 
 

STEP #4

If you or your company fails to comply with the EAR and the BIS, there can be serious consequences. Some possibilities are:
 
  • - Civil penalties per violation up to $1M and imprisonment for up to 20 years
  • - Administrative penalties can reach the greater of $250,000 per violation
  • - Denial of export privileges
It is highly recommended that you consult with an international trade attorney to ensure compliance with ITAR and the DDTC. A trade attorney can help you navigate the specifics of the ITAR and help you develop a company compliance plan for future defense trade transactions.
 

Defense Industry Maine and the Maine International Trade Center are here to help you on your defense trade endeavors! We can research defense markets, help you navigate the EAR and BIS process, and put you in touch with the right people to help your Maine company succeed. Contact us today for more information!

Note: The sale of defense products, technical data, software and services in defense industry transactions is regulated under the International Traffic In Arms Regulations (“ITAR”), the Export Administration Regulations (“EAR”), the U.S. sanctions laws, the Foreign Corrupt Practices Act and other laws.  Companies engaged in this activity may be subject to export licensing, registration, recordkeeping and other legal requirements.  MITC is not providing legal advice to your company regarding compliance under these laws and we strongly recommend that you obtain legal counsel to advise you on these issues.