Everything You Need to Know About the Export Administration Regulations

Exporting can be tricky, and one of the challenging aspects is dealing with the Export Administration Regulations (EAR). EAR compliance can be confusing for US exporters because of its wide-ranging rules and complex terms. Sometimes, not being aware of these regulations can lead exporters to overlook their importance for their goods.

No matter the reason, not following EAR laws properly can cause problems for your shipments. This article is here to help you by breaking down all the important aspects of EAR that you need to know before exporting. We want to make sure you understand these regulations well, so your shipments don't run into any issues.

What Does EAR Stand For?

The EAR, meaning Export Administration Regulations, is a set of rules and laws ensuring the rightful export of articles and services with a purported dual use. By dual-use, we mean goods with civilian applications but potential military usage as well. These regulations cover a wide variety of items and technologies categorized based on different factors.

In general, EAR laws cover all commercial and dual-use items including non-military goods, hitherto unregulated by any other law. The goods, technologies, and services falling beyond the jurisdiction of the EAR are regulated by the Department of State or by a formal commodity jurisdiction request (CJ).

The primary aim of the EAR regulation is to safeguard the national security and economic interests of the United States. In this regard, it becomes important to take a look at the EAR reasons for control. Part 742 of the EAR framework includes the reasons for control used to determine the necessity of a license for any particular export article.

What Is the Regulatory Framework of the EAR?

Export Administration Regulations are one of the primary export control laws of the United States. The administrative body defining EAR is the BIS or Bureau of Industry and Security which falls under the jurisdiction of the US Department of Commerce. The latter is also responsible for regulating and monitoring most of the exports from the US.

The EAR laws implement the EAA or Export Administration Act. This act of 1979 was signed as the primary foundation for all the US export control laws to be formulated in the future. The act was extended by the International Economic Powers Enhancement Act (IEEPA) of 2007 which made violations even costlier.

What is the Structure of EAR?

The EAR regulation framework is a holistic one containing information on all aspects of the regulation including general info, definitions, scope, exceptions, policy controls, embargoes, applications, etc.

Part 736 of the EAR consists of the very crucial General Prohibitions which essentially serve as the concerns around which EAR laws are built. The ten General Prohibitions are based on five checks to determine the applicability of EAR on questioned goods:

• Classification of the item - The classification of the item on the Commerce Control List
• Final destination of the goods - The country of ultimate destination for an export, reexport, or transfer (incountry)
• End user of the goods - The ultimate end user of the item
• End use of the goods - The ultimate end-use of the item
• Conduct - Conduct such as contracting, financing, and freight forwarding in support of a proliferation project or a ‘military-intelligence end use’ or a ‘military-intelligence end user’

The General Prohibitions define the EAR-controlled items which may not be exported, re-exported, transferred, or conducted in any way unless a license for them is obtained or qualification for license exception is gained. Here is a quick view of the 10 general prohibitions:

General Prohibition One — Export and reexport of controlled items to listed countries

General Prohibition Two - Reexport and export from abroad of foreign-made items incorporating more than a de minimis amount of controlled U.S. content (U.S. Content Reexports)

General Prohibition Three - Foreign-direct product (FDP) rules

General Prohibition Four (Denial Orders) - Engaging in actions prohibited by a denial order

General Prohibition Five – Export, reexport, or transfer (in-country) to prohibited end-uses or end-users (End-Use End-User)

General Prohibition Six – Export, reexport, and transfer (in-country) to embargoed destinations (Embargo)

General Prohibition Seven – Support of proliferation activities and certain military intelligence end uses and end users (“U.S. person” activities)

General Prohibition Eight - In transit shipments and items to be unladen from vessels or aircraft (In-transit)

General Prohibition Nine - Violation of any order, terms, and conditions (Orders, Terms, and Conditions)

General Prohibition Ten - Proceeding with transactions with the knowledge that a violation has occurred or is about to occur (Knowledge Violation to Occur)

Is CCL Related to Export Administration Regulations?

Yes, CCL is a part of the EAR framework. The Commerce Control List or CCL is a list of all the items covered by the EAR laws and maintained by the Bureau of Industries and Security. The list consists of different categories of EAR-controlled goods and technologies differentiated by their intended purpose, final application, and function.

Here is a list of the 10 categories defined in the commerce control list:

0 = Nuclear materials, facilities, and equipment (and miscellaneous items) 1 = Materials, Chemicals, Microorganisms, and Toxins 2 = Materials Processing 3 = Electronics 4 = Computers 5 = Telecommunications and Information Security 6 = Sensors and Lasers 7 = Navigation and Avionics 8 = Marine 9 = Propulsion Systems, Space Vehicles, and Related Equipment

The categorization criteria in the CCL are not the penultimate ones. There can be additional restrictions and regulations imposed on the items covered by the EAR based on other factors. These include the final destination of the shipment, the end party/recipient of the goods, and the intended application of the goods.

The CCL-defined items are identified through unique export control classification numbers also known as ECCN codes. These codes help with the classification of exports and check whether a license or restriction might be required for any particular export item.

The ECCN classification module of Trademo Compliance can help you quickly and correctly determine the ECCN number for your exports. No need to shuffle between websites or go through long lists of terminologies!

Learn More

Are There Any License Exceptions for EAR Controlled Goods?

It is to note that an item being on the Commerce Control list does not necessitate the requirement of a license for its export. Items belonging to certain specified categories in the CCL are exempted from the license requirements. These include educational information, fundamental research, and public domain information.

The EAR framework does have room for exceptions to license requirement for exports. Part 740.2 includes general restrictions that are required to be met by exports for license exception eligibility. With the recent Export Control Reform, additional restrictions have been added for the 600 series articles to obtain license exemption.

The EAR license exceptions are categorized on the basis of list and transaction.

It is advisable to claim EAR license exceptions only after careful study of the regulations and assessment of the controls applicable to your goods. You can do so by visiting the BIS website and going through the details of the EAR framework.

Conclusion

The vast scope and complicated nature of Export Administration Regulations demand strong attention to the details for ensuring full EAR compliance. It is suggested you take help from advanced software that can present you with all the controls applicable to your exports. With Trademo Compliance, you can identify all the compliance controls for your goods and check whether they are EAR controlled.

Learn More