Successfully engaging in international trade requires a thorough understanding of export control regulations. This detailed guide, which comes courtesy of the knowledgeable attorneys at Sequoia Legal, will go over how to obtain an export license from the Bureau of Industry and Security (BIS).
Whether you're a novice exporter or an old hand looking to refine your compliance processes, this post will equip you with the necessary insights to ensure that your export activities align with U.S. regulatory standards.
What Is an Export License?
An export license is a government document that authorizes the export of specific goods, technologies, or services to certain destinations under defined conditions. This type of license is instrumental in regulating exports that could impact a country’s national security, foreign policy, and economic interests.
Do I Need an Export License?
Determining whether you need an export license is a crucial step in the process of international trade.
According to the U.S. Commercial Service, about 95% of items exported from the United States don’t require an export license. However, this doesn’t mean you can freely sell any item to any country or buyer. There are still stringent regulations regarding the countries to which you can export and the specific buyers you can sell to.
As an exporter, it’s your responsibility to verify that your product falls within the 5% that requires licensing, which may be governed by the Bureau of Industry and Security (BIS) or the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC), depending on the item.
Proper due diligence on the product’s end use and user is essential to ensure compliance with U.S. export laws and regulations.
What Items Require an Export License?
An export license is required for certain items that the U.S. government classifies as “controlled” due to reasons of national security, foreign policy, or economic protection.
The following exports typically necessitate an export license:
Military Items
Any goods, software, or technology designed or adapted for military use and listed on the United States Munitions List (USML) require a license issued by the U.S. Department of State under the International Traffic in Arms Regulations (ITAR).
Dual-Use Goods
Dual-use goods are items that have both civilian and military applications. If your items fall under the Commerce Control List (CCL), they may need a license from the BIS under the Export Administration Regulations (EAR).
Sensitive Technologies
Exports of certain high-technology items, particularly those that could have chemical, biological, nuclear, or missile technology applications, also require licensing.
Exports to Embargoed or Sanctioned Countries
Items destined for certain countries under U.S. embargoes or sanctions must generally be licensed, including but not limited to Cuba, Iran, North Korea, Russia, certain regions of Ukraine, Belarus and Syria. However, embargoes and sanctions change frequently so you must confirm current applicable embargoes and sanctions before proceeding.
Exports to Restricted Parties
Selling to individuals, organizations, or companies listed in the U.S. Government Denied Persons List, Entity List, or Specially Designated Nationals List requires special authorization.
Identifying Controlled Goods
Export Control Classification Numbers (EECNs) are a key element in identifying controlled goods in the domain of U.S. export regulations. Each ECCN categorizes specific items based on their nature, technical parameters, and potential applications, helping determine whether an item requires an export license under the Export Administration Regulations.
An ECCN consists of a five-character alphanumeric code where each character signifies a specific piece of information about the item. The first character (a number) indicates the item’s category; the second character (a letter) denotes its product group; and the last three characters (a combination of numbers and letters) provide details about the type of control.
How Do You Find the Right ECCN?
Finding the correct ECCN for your product involves a thorough examination of the Commerce Control List.
Here's a step-by-step breakdown.
1. Start with a Detailed Search
Begin by searching the CCL for terms that describe your product’s technical characteristics and functions. Avoid using broad or generic terms; instead, use specific descriptions to make sure you cover all possible classifications related to your product.
2. Review the CCL
The CCL is organized into categories, and each product group within a category has its own list of ECCNs. You can access the CCL chapters alphabetically through a designated link, which helps in tracking down the appropriate ECCN.
3. Check the Reasons for Control and the Country Chart
Once you identify a potential ECCN, review the reason for control specified in the ECCN entry within the full Export Administration Regulations. Subsequently, consult the country chart in Part 738 of the EAR to find out whether the product is controlled for export to specific destinations based on the stated reason.
4. Determine Whether Your Item Is EAR99
If your product doesn’t match any specific ECCN, it likely falls under the designation EAR99, which covers most commercial products not specified on the CCL. Items classified as EAR99 generally don’t require a license unless they’re being exported to an embargoed country, to a denied person or entity, or for a prohibited end use.
5. Request a Classification from BIS
If you’re still uncertain about the classification of your product after reviewing the Commerce Control List, you can request an official classification determination from the BIS. Submit your request electronically via the Simplified Network Application Process Redesign (SNAP-R) system.
How to Apply for an Export License
Applying for an export license in the United States involves a detailed process that demands careful attention to regulatory compliance and accurate documentation.
The following are general instructions for applying for an export license.
Confirm the Need for a License
First, verify that your product, service, or technology actually requires an export license based on its classification, destination, end user, and end use. You can do this by checking the Export Administration Regulations or the International Traffic in Arms Regulations (ITAR), depending on the nature of the item.
Classify Your Item
Find the ECCN for items under the EAR or the appropriate category on the USML for items under ITAR. This classification will guide the licensing requirements.
Check the License Exceptions
Before applying for a license, see if your transaction qualifies for any license exceptions. These can allow you to export without a formal license under specific conditions outlined in the regulations.
Register with the Relevant Authority
For ITAR-controlled items, you’ll need to register with the DDTC. Registration isn’t typically required for EAR-controlled items, but you must have a company profile set up in the System for Award Management (SAM) if you plan to do business with the federal government.
Prepare Supporting Documentation
Gather all necessary documents that support your license application. This may include technical specifications of the product, the end user’s information, End-Use Statements, purchase orders, and contracts.
Submit Your License Application
For EAR-controlled items, apply through the BIS’s online SNAP-R system. For ITAR-controlled items, submit your application via the Defense Export Control and Compliance System (DECCS).
Make sure all information and documentation is accurate and complete to avoid delays, and include key details about the transaction, such as the item’s destination, the purpose of the export, and the parties involved.
Await Review and Approval
Once you submit your application, it will be reviewed by the relevant authorities. The review process may call for checks against denied parties lists and special national security and foreign policy considerations.
Receive and Comply with License Conditions
If your application is approved, you’ll receive an export license specifying any conditions or limitations. Adhere strictly to these conditions to remain compliant with export control laws.
Maintain Comprehensive Records
Keep detailed records of all export transactions and licenses for at least five years after the date of the export, as required by U.S. law. This is important for compliance audits and potential future references.
Stay Up to Date on Regulatory Changes
Export regulations can change frequently, so it’s a good idea to stay informed about any updates or changes to ensure ongoing compliance.
Required Documents for Export Licenses
Various documents are typically required to support an application for an export license. These documents are essential for assessing the legitimacy and compliance of the transaction.
Here’s an overview of the common documents needed for an export license application.
Application Form
For EAR-controlled items, use the SNAP-R system to submit Form BIS-748P electronically, along with any additional documents.
For items under ITAR, use the DDTC’s Defense Export Control and Compliance System to submit the required forms, which will typically be DSP-5 for permanent exports, among others.
Technical Specifications
You must provide a detailed description of your product, including its technical parameters, performance characteristics, and any blueprints or schematics that accurately describe the item.
End-User Information
You must also furnish information about the recipient of the export, including their full name, address, and what they intend to do with the item. This information may be part of an End-Use Statement or included in a formal end-user certificate.
End-Use Statement
An End-Use Statement is a declaration from the end user stating how they intend to use the items being exported. This is particularly important for controlled goods, as it ensures that they won’t be used for purposes contrary to U.S. national security or foreign policy interests.
Purchase Order or Contract
You’ll be expected to provide a copy of the purchase order or sales contract between the exporter and the customer. This document details the items being sold, including quantities, prices, and terms of sale.
Consignment Information
To ensure compliance with export regulations, you must explain how the goods will be shipped, including the mode of transport and route of shipment. This will be integral information if the item is to be shipped through certain countries.
Supporting Documents for License Exceptions (If Applicable)
If you’re claiming a license exception, you must offer documentation supporting eligibility for the exception. Such documentation can include specific agreements, additional certifications, or technology control plans.
Compliance Certifications
Depending on the nature of the export, additional compliance certifications might be required to demonstrate adherence to specific regulatory requirements or standards.
Registration Proof for ITAR
For ITAR-regulated exports, you must include proof of registration with the DDTC. Proof of registration shows that your company is authorized to manufacture or export defense-related articles and services.
Additional Approvals or Licenses (If Relevant)
Additional approvals from other U.S. agencies, such as the Nuclear Regulatory Commission or the U.S. Department of Agriculture, may be necessary, depending on the product or destination.
How Long Does It Take to Get an Export License?
The time it takes to obtain an export license in the U.S. can vary based on several factors, including the type of goods being exported, the destination country, the specific regulations governing those goods, and the completeness and accuracy of the submitted application.
For products under EAR, the processing time generally ranges from several weeks to several months. The BIS aims to process most applications within 90 days.
The process might take longer for defense-related products controlled under ITAR, which is managed by the DDTC. Possible extensions may be contingent on the complexity of the application and the nature of the items in question.
Take Action to Secure Your Export License
Navigating the complexities of export regulations requires meticulous preparation and a deep understanding of the relevant laws. By gathering the necessary documents and following the steps outlined here, you can facilitate the process and ensure compliance with U.S. export controls.
Even so, you could risk running into delays or legal issues that impact your business operations and reputation without professional assistance. The knowledgeable export compliance lawyers at Sequoia Legal can help. Contact us today to get the guidance and support you need.
