This chapter covers a wide range of regulations, procedures, and practices that fall into three categories: regulations that exporters must follow to comply with U. S. law; procedures that exporters should follow to ensure a successful export transaction; and programs and certain tax procedures that open new markets or provide financial benefits to exporters. Export Regulations General Introduction The Export Administration Regulations (EAR) regulate the export and reexport of items for national security, nonproliferation, foreign policy, and short supply reasons.
The Department of Commerce’s Bureau of Export Administration (BXA) has taken important steps to remove unnecessary obstacles to exporting, including completion of U. S. regulatory reform effort and export control liberalizations. Working closely with the exporting community, BXA has simplified the EAR, especially for those companies new to exporting. In addition, export controls have been liberalized on many products sold by U. S. companies around the world, consistent with national security and foreign policy concerns.
A relatively small percentage of exports and reexports requires the submission of a license application to BXA. License requirements are dependent upon an item’s technical characteristics, the destination, the end use, and the end user. Determining whether a license is required for export is easier under the newly drafted regulations which consolidate license requirements previously scattered throughout the regulations. Once a classification has been determined, exporters may use a single chart to determine if licenses are needed for a country.
The revised regulations include answers to frequently asked questions, detailed step-by-step instructions for finding out if a transaction is subject to the regulations, how to request a commodity classification or advisory opinion, and how to apply for a license. The EAR groups items (commodities, software, and technology) into ten categories each containing several entries. These entries are the Export Control Classification Numbers (ECCN). These entries are in Supplemental N0. 1 to part 774 of the EAR, which is the Commerce Control List (CCL).
The CCL and the Country Chart, Supplement No. o part 738 taken together, define items subject to export controls based solely on the technical parameters of the item and the country of ultimate destination. Items that are listed on the CCL but do not require a license by reason of the Country Chart and items classified as EAR99 (see 734. 3(c) of the EAR entitled Scope of the EAR) are designated as NLR, or no license required. All countries are not treated in the same way under the EAR because different countries present different national security, nonproliferation, or foreign policy considerations for the United States.
A license requirement may be based on the end use or end user in a transaction, primarily for proliferation reasons. Part 744 of the EAR describes such requirements and relevant licensing policies and includes both restrictions on items and restrictions on the activities of U. S. persons. The EAR covers more than exports. Items subject to the EAR are generally controlled for reexport from one foreign country to another. A relatively small percentage of exports and reexports requires an application to BXA for a license. Many items are not on the CCL or, if on the CCL, require a license only to a limited number of countries.
Other transactions may be covered by one or more License Exceptions in the EAR, part 740. However, a license is required for virtually all exports to embargoed destinations such as Cuba. Part 746 of the EAR describes embargoed destinations and refers to certain additional controls imposed by the Office of Foreign Assets Controls of the Treasury Department. Sometimes the EAR are referred to as dual use regulations. The term dual use refers to items that can be used for both military and other strategic uses (e. g. , nuclear) and commercial applications. It also refers to items with solely civil uses.
The term is also used to distinguish the scope of the EAR from items covered by the regulations of other agencies. For example, the U. S. Department of State controls exports of weapons and military related items on the U. S. Munitions List, while the Department of Energy and the Nuclear Regulatory Commission control certain items for nuclear reasons. For more information on the control of agencies other than BXA, see Supplement No. 3 to part 730 of the EAR. Steps for Using the EAR You may first look at part 732 of the EAR for the steps you follow to determine your obligations.
Part 734 defines the scope of the EAR and excludes certain publicly available technology, as well as items properly subject to the jurisdiction of another agency. What is the proper classification for your item? This information is essential to determining any licensing requirements under the EAR. You may either classify your item on your own according to the CCL or you may ask BXA for assistance. The EAR is structured in a way that you should follow the steps in order. To determine whether you need a license, consider, in order, the scope of the EAR (part 734), the ten general prohibitions (part 736), and the license exceptions (part 740).
General Prohibitions The general prohibition are found in part 736 of the EAR. The ten general prohibitions describe certain exports, reexports, and other conduct, subject to the scope of the EAR, in which you may not engage unless you have a license from BXA or qualify under part 740 of the EAR for a license exception from each applicable general prohibition paragraph. License Exceptions A license exception is an authorization for the export or reexport of some commodities, technology, or software under certain conditions. This gives you authority to ship certain items subject to the EAR that would otherwise require a license.
Eligibility for license exceptions may be based on the item to be exported or reexported, the country of ultimate destination, the end use of the item, or the end user. If a license exception is available for a particular transaction, you may proceed with the transaction without a license. A license exception does not require a specific application nor approval from the Department of Commerce. However, you are required to meet all terms, conditions, and provisions for the use of that license exception. Applying for a License and Application Processing
If an export license is required, you must prepare a Form BXA-748P, Mulipurpose Application Form, and submit it to BXA. The form can be used for requesting an export license, reexports, or commodity classifications. You may request forms by fax at 202-219-9179 or by phone on 202-482-3332. You must be certain to follow the instructions on the form carefully. In some instances, technical brochures and support documentation must also be included. In reviewing specific license applications, BXA will conduct a complete analysis of the license application along with all documentation submitted in support of the application.
In addition to reviewing the item and end use, BXA will consider the reliability of each party to the transaction and review any available intelligence information. To the maximum extent possible, BXA will make licensing decisions without referral of license applications to other agencies; however, BXA may consult with other U. S. departments and agencies regarding any license application. Further information concerning the review policy for various controls is contained in parts 742 and 750. You may contact BXA for status of your pending certification request, advisory opinion, or license application.
For advisory opinion requests, telephone 202-482-4905 or send a fax to 202-219-9179. For license applications and classification requests, telephone BXA’s System for Tracking Export License Applications (STELA) at 202-482-2752. STELA is an automated voice response system that, upon request via any standard touch-tone telephone, will provide you with up-to-the-minute status on any license application pending at BXA. Requests for status may be made only by the applicant or the applicant’s agent.