What to consider when exporting and re-exporting US items
US items

What to consider when exporting and re-exporting US items

Any US items in a company’s product portfolio are subject to US re-export control law under the EAR. So, which requirements have to be met? Get an overview.

Author: Ulrike Jasper
Ulrike Jasper
24.09.2024

Trade with US items calls for compliance with EAR
CCL and ECCN: Product lists as traditional tools for checks
ECCN or EAR99?
EAR sanctions lists: mandatory business partner check
Many critical designated uses under EAR
Countries under total embargo as per EAR
License requirement of dual-use goods: destination is critical
Accurate master data is required
Automating US export control checks with AEB

Trade with US items calls for compliance with EAR

The US Export Administration Regulations (EAR) are governed by the US Bureau of Industry and Security (BIS) and regulate the export and re-export of US products. If a company's product range includes US items (on their own or installed in products), they are subject to the EAR – even if the company itself or its customers are located outside the US.

Below you will find further information on the classification of goods, end-user restrictions, critical designated uses, and the relevance of the destination of your products – in the context of US export controls.

CCL and ECCN: Product lists as traditional tools for checks

Supplement No. 1 to Part 732 EAR contains an Export Control Decision Tree (on PDF page 14) that guides you step by step through the EAR. This decision tree specifies that all US items identified in a company’s product portfolio must be classified using the US dual-use goods list (Commerce Control List, or CCL). 

The classification of civilian goods under US re-export control law is also a purely technical comparison between the technical parameters of the US item to be classified and the description of the goods in the CCL.

Note: The goods covered by EAR licensing requirements are described in the CCL, but their technical attributes are specified in the Export Control Classification Numbers (ECCN). The high-tech items listed in Annex I of the EU Dual-Use Regulation No. 2021/821 are based on decisions of the international export control regimes, so they’re also found in the CCL. The CCL also lists a large number of national (US) dual-use goods.

How do you determine whether you fall within the scope of the EAR? And what help is available? This article sheds light on the topic and delivers tangible examples:  

Tips and checks for US export controls

ECCN or EAR99?

Checking the product lists is the first step to establish licensing requirements – and thus the foundation of a reliable corporate export control organization. Does the material master include commodities, software, or technologies with technical attributes matching the ECCN descriptions in the CCL? Every exporter should check for this.

All US items that cannot be assigned to any ECCN based on their technical specifications are classified as EAR99. These EAR99 items are, therefore, unlisted bulk goods. EAR99 items may require a license based on their destination, business partner, or specific end-use.

The Export Control Decision Tree (on PDF page 14) shows that all US items (ECCN or EAR99) must be checked for possible licensing requirements arising from the General Prohibitions 4–10 of § 736.2 EAR.

Legal certainty for shipping your goods

The AEB software Export Controls automates the process of checking your export control classified goods for latest national and international bans and restrictions – securely and efficiently.

More information

EAR sanctions lists: mandatory business partner check

US re-export control law also defines restrictions based on the end-user. The presence of the recipient of US items on an EAR sanctions list may, depending on the list, trigger bans or licensing requirements. By way of comparison: A “match” on Europe’s CFSP list always leads to comprehensive financial sanctions. The BIS maintains four lists that must be observed when trading US items worldwide:

Denied Persons List (DPL)

The BIS can impose a denial order on individuals and companies that have violated US export law, prohibiting them from trading in US items. All persons, companies, and organizations subject to such a denial order are listed in the DPL and excluded from trading in US items. This means that US items may not be shipped to (or purchased from) listed persons and companies.

Entity List (EL)

The Entity List is a list maintained by the BIS that includes persons, companies, and organizations that, in the view of the US, pose a significant risk to US national security or are involved in activities that are contrary to US national and foreign policy security interests (§ 744.11 EAR).

Trade in US products in business transactions with persons, companies, or organizations listed on the EL requires a license.

The respective list entry shows which US items are subject to these licensing requirements. In most cases, these are “all items subject to the EAR.” The list entry also contains information on the license preview policy, which usually consists of a presumption of denial.

Unverified List (UL)

The US authorities were unable to conduct adequate pre- or post-shipment controls for the persons on the UL. From a US perspective, it is uncertain whether these persons are qualified to receive US items. The UL serves to warn companies to exercise heightened caution when doing business with the listed persons. 

The re-exporter must ensure that the US items are not used in any prohibited end-use by means of a written declaration requested from the business partner.

Military End-User-List (MEU)

The MEUL includes companies and organizations from Burma, China, Russia, and Venezuela classified by the US government as military end-users as defined in § 744.21(g) EAR. 

Transactions with the entities listed on the MEUL are subject to licensing requirements with regard to the ECCN listed in Supplement No. 2 to Part 744 EAR.

Additional information

The financial sanctions of the US are administered by OFAC and defined in the Specially Designated Nationals (SDN) list. Some of the sanctions programs on the SDN list are also relevant for non-US persons.

Standarddatei

Automatically updated sanctions lists

AEB's Compliance Screening software runs automated business partner screening in the background of your transactions. Optional integration into your ERP/CRM systems such as SAP®, Salesforce, Microsoft Dynamics 365, and more. And with extended content from Dow Jones and Reguvis.

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Many critical designated uses under EAR

Compared to EU export control laws, which currently contain four catch-all clauses, § 744 EAR encompasses significantly more controlled designated uses. Companies trading in US goods are advised to look at the list of various critical designated uses and comply with all legal requirements.

Checking critical end-use comprehensively

Are your goods destined for military end-uses? Or are they to be used for human rights violations? AEB's Export Controls software checks critical end-use and automatically stops your trade transactions when prohibited actions are identified. 

More information

Countries under total embargo as per EAR

If the destination country is Iran, North Korea, Syria, or Cuba, the Commerce Country Chart (CCC) list (Supplement No. 1 to Part 738 EAR) includes a general reference to the embargo regulations of § 746 EAR. In addition to those regulations, business with embargoed countries is also subject to OFAC regulations.

License requirement of dual-use goods: destination is critical

Unlike Art. 3 of the EC Dual-Use Regulation, US re-export control law does not specify a blanket license requirement for the re-export of all listed dual-use goods (US items with an ECCN). What matters under US law is the destination of the dual-use goods. This is why the CCL includes the CCC country list.

But how to determine whether a specific re-export requires a license under the EAR? Refer to the Reasons for Control defined in the ECCN to check whether the box for the re-export destination country is marked in the Commerce Country Chart.

Only when this is the case does the re-export require a license. Companies need to also check whether the specific export transaction qualifies for a license exception under § 740 EAR. Only when no exception applies is it necessary to actually apply to the BIS for a re-export license.

Observing country embargoes at all times

Many jurisdictions around the world issue and frequently amend embargo regulations. AEB's Export Controls software runs automated embargo checks for you in the background of your export transactions to help you prevent violations.

More information

Accurate master data is required

Export controls, whether under EU and other applicable regional regulations or US laws, essentially require master data maintenance and comprehensive documentation. The master data must show which products were US items subject to the EAR and how these products are to be classified under the US dual-use list. Only then is an export control check possible.

In addition to the extensive checks required for US re-export control law, it’s important not to overlook EU export controls or the national regulations that apply in the country an organization is based in. 

Because in the end, all products of companies are subject to all the rules and regulations of their own jurisdiction. To avoid export control violations, companies are advised to set up an Internal Compliance Program (ICP) for both jurisdictions within their company and make its implementation routine practice.

US and around the globe: Automated export control checks with AEB

Worldwide export controls and sanctions list screening. Including checks on critical end use and bans on indirect provisions. The Trade Compliance Management suite from AEB has got you covered. Contact us to discuss your individual requirements. 

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