Determining Export License Requirements

By Margaret M. Gatti, Esquire
April 1999 (Updated April 2007)
All Rights Reserved

The need for an export license must be assessed at two different levels.

The first level assessment is made based on the nature of the product intended for export. Thanks to a gradual relaxation of traditional product-based export controls, most products are now classified by the Commerce Department as EAR99 and as a result don't require product-specific export licenses. But that doesn't mean you can totally forget about export licenses. You still have one more license assessment to make before you can export your product license-free.

The second level assessment of the need for an export license is based on the end user, ultimate destination and end use of the product to be exported. You must ask your buyer to provide you information on the end user, ultimate destination and end use intended for your product and you must screen the information provided as noted below:

-End users must be screened, along with buyers and the principles of end users and buyers, to insure that they do not represent any prohibited or restricted end users which are currently listed on various government issued "bad guy lists." There are seven different U.S. government-issued "bad guy lists" with which exporters must contend. Five of these lists spell out prohibited end users & buyers, i.e., end users and buyers to whom you can't sell in any event. These prohibited lists are as follows:  (a) the Denied Persons List; (b) the Specially Designated Nationals List; (c) the Debarred List; (d) the Nonproliferation Sanctions List; and (e) General Order 3 to Part 736 of the Export Administrations.  The last two "bad guy lists" - the Denied Persons List and the Unverified List - prescribes restricted end users & buyers, i.e., end users and buyers to whom you can't sell without an export license.

-Ultimate destinations must be screened to insure that they do not represent any country which is currently listed on various government-issued "embargoed country lists." There are three different embargoed country lists with which exporters must content, i.e., the U.S. Department of State's Embargoed Country List, the U.S. Department of Commerce's Embargoed Country List and the U.S. Department of the Treasury's Embargoed Country List.

-End uses must be screened to insure that they do not represent any prohibited or restricted end uses which currently comprise any use related to the design, development, production or deployment of weapons of mass destruction, i.e., missiles, nuclear weapons and chemical & biological weapons.

The obligation to assess export license requirements at two different levels makes it clear that exporting products license-free is not a status that exporters should cavalierly assume. In exporting products license-free, exporters must first make sure that their exports do in fact qualify as valid license-free exports.