- What does the term "export" mean?
In general, the term "export" means the act of shipping goods out of one Customs' territory into another Customs' territory. Exporters should keep in mind, however, that the term "export" is defined differently -- and separately -- by the U.S. government agencies which control the export of products from the U.S.
- Which U.S. government agencies control the export of products from the U.S.?
Product-specific export controls are primarily the domain of the U.S. Department of State and the U.S. Department of Commerce.
- What definition is given the term "export" by the U.S. State Department?
For the State Department, an export is defined as: (a) sending or taking a defense article out of the United States in any manner, except by mere travel outside of the United States by a person whose personal knowledge includes technical data; or (b) transferring registration, control or ownership to a foreign person of any aircraft, vessel or satellite covered by the U.S. Munitions List, whether in the United States or abroad; or (c) disclosing (including oral or visual disclosure) or transferring in the United States any defense article to an embassy, any agency or subdivision of a foreign government (e.g. diplomatic missions); or (d) disclosing (including oral or visual disclosure) or transferring technical data to a foreign person, whether in the United States or abroad; or (e) performing a defense service on behalf of, or for the benefit of, a foreign person, whether in the United States or abroad.
- Over which type of products does the U.S. Department of State have export control jurisdiction?
The U.S. Department of State has export control jurisdiction over the export of defense items.
- Which items are considered defense items for export control purposes?
Articles, services and related technical data are designated as defense items if: (a) they are specifically designed, developed, configured, adapted or modified for a military application and do not have a predominant civil application or a performance equivalent to that of an article or service used for civil applications; or (b) they are specifically designed, developed, configured, adapted, or modified for a military application and have significant military or intelligence applications, such that control by the Department of State, Office of Defense Trade Controls is necessary.
- Is there a list of defense items?
Yes, the list is called the Munitions List which is found in section 121 of the International Traffic in Arms Regulations (ITAR).
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What is a defense article for purposes of exporting?
A "defense article" is defined in the International Traffic in Arms Regulations (ITAR) as any item or technical data designated U.S. Munitions List, including technical data recorded or stored in any physical form, models, mockups or other items that reveal technical data directly relating to items designated in the Munitions List. It does not include basic marketing information on function or purpose or general system descriptions.
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How is "technical data" defined?
Technical data, defined under the ITAR, is:
1. Information, which is required for the design, development, production, manufacture, assembly, operation, repair, testing, maintenance or modification of defense articles. This includes information in the form of blueprints, drawings, photographs, plans, instructions and documentation.
2. Classified information relating to defense articles and defense services.
3. Information covered by an invention secrecy order.
4. Software directly related to defense articles which includes, but is not limited to, the system functional design, logic flow, algorithms, application programs, operating systems and support software for design, implementation, test, operation, diagnosis and repair.
5. Technical data does not include information concerning general scientific, mathematical, or engineering principles commonly taught in schools and universities or information in the public domain.
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Who must register as an exporter with the State Department?
1. Any person who engages in the U.S. in the business of either manufacturing or exporting defense articles services is required to register with the Directorate of Defense Trade Controls of the State Department.
2. Exemptions. Registration is not required for: (a) officers and employees of the U.S. Government acting in an official capacity; (b) persons who pertinent business activity is confined to the production of unclassified technical data only; (c) persons whose manufacturing and export activities are solely restricted to and licensed under the Atomic Energy Act; and (d) persons who engage only in the fabrication of articles for experimental or scientific purpose, including research and development.
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What definition is given the term "export" by the U.S. Commerce Department?
The term "export" is specifically defined by the Commerce Department as: (a) an actual shipment or transmission of Commerce Department controlled items out of the U.S.; or (b) the release of technology or software subject to Commerce Department export control to a foreign national in the U.S. (a so-called "deemed export").
- Over which type of products does the U.S. Department of Commerce have export control jurisdiction?
The U.S. Department of Commerce has export control jurisdiction over the export of dual use items and items that have strictly civilian or commercial uses.
- Which items are considered dual use items for export control purposes?
In general, the term dual use items refers to items that have potential for both military and civilian/commercial uses, i.e., items which do not meet either test for defense items status and which as a result, are not controlled for export by the State Department.
- Is there a list of dual use items?
Yes, but it is a partial list that is called the Commodity Control List (CCL) which is found in section 774 of the Export Administration Regulations (EAR). In general, however, an item is a dual use item if it is not on the Munitions List.
- What can an exporter do if the exporter is unsure as to whether a product is controlled for export purposes by the State Department or by the Commerce Department?
An exporter who is unsure as to the export control jurisdiction for a particular product can submit a written Commodity Jurisdiction Request to the State Department.
- Does either the State Department or the Commerce Department require an exporter to obtain a product-specific export license before exporting a product from the U.S.?
Items subject to the export control jurisdiction of the State Department (Munitions List items) almost always require an export license before they can be exported from the U.S., whereas items controlled for export purposes by the Commerce Department (dual use items and civilian/commercial) require an export license in only a very small percentage (estimated at 5% or less) of cases.
- When does an item subject to the export control jurisdiction of the Commerce Department require an export license?
An item subject to the export control jurisdiction of the Commerce Department is currently licensable if it has been assigned a specific Export Commodity Control Number (ECCN) by the Commerce Department which is controlled for export to specific countries and the export is to be made to one of these countries.
- Other than product-specific export controls are there any other issues that subject the export of a product to a licensing requirement?
Yes. There are series of export controls that are based on end use, end user and ultimate destination.
- What are end use export controls?
End use export controls are prescribed by the Commerce Department in Part 744 of the Export Administration Regulations (EAR) which clearly prohibits or otherwise restricts exports for certain end uses. Such prohibited or otherwise restricted end uses currently include nuclear end uses, missile end uses, chemical and biological weapon end uses, maritime nuclear propulsion end uses, and foreign vessel and aircraft end uses.
- What are end user export controls?
End user export controls are export prohibitions or export restrictions that are prescribed against certain specified individuals and companies (restricted persons) by the Department of State, the Department of Commerce and the Department of Treasury. Each of these agencies produces one or more restricted persons lists. These lists currently include the State Department's debarred persons list, the Commerce Department's denied persons list and Entity List, and the Treasury Department's list of specially designated nationals. All U.S. exporters must screen the names of their buyers and end users against each of these restricted persons lists before completing a proposed export transaction to determine if such buyers and/or end users are prohibited (an export sale cannot be made to these individuals) or restricted (an export sale can be made only under an export license).
- What are ultimate destination export controls?
Ultimate Destination export controls are export controls prescribed by the Department of State, the Department of Commerce and the Department of Treasury. Each of these agencies produces one or more lists of restricted or embargoed destinations. All exporters must screen the ultimate destination of their exports against the range of embargoed destinations prescribed by State, Commerce and Treasury for the purpose of determining if such ultimate destinations are subject to any general export prohibitions or to any general export license requirements.
- Which countries are currently subject to ultimate destination export controls?
The countries which are currently subject to ultimate destination export controls are Cuba, Iran, Iraq, Libya, North Korea, and Sudan. In considering ultimate destination export controls, it is important to note that the export controls imposed vary on a country-by-country basis.
- What is a deemed export?
A deemed export is the release of technology or software subject to the Export Administration Regulations (EAR) to a foreign national in the U.S.
- Which products and services are subject to the Export Administration Regulations (EAR)?
The products and services that are subject to the export jurisdiction of the EAR are: (a) all items in the United States, including in a U.S. Foreign Trade Zone or moving in transit through the United States from one foreign country to another; (b) all U.S. origin items wherever located; (c) U.S. origin parts, components, materials or other commodities incorporated abroad into foreign-made products, U.S. origin software commingled with foreign software, and U.S. origin technology commingled with foreign technology, in quantities where the controlled content exceeds certain prescribed de minimis levels, generally averaging 25% of the total value of the foreign made products, software or technology, except in the case of embargoed countries where the de minimis level is 10%; (d) certain foreign-made direct products of U.S. origin technology or software; and (e) certain commodities produced by any plant or major component of a plant located outside the United States that is a "direct product" of U.S. origin technology or software.
- What is a Shipper's Export Declaration (SED)?
The SED is a Commerce Department form which is required by law (United States Code, Title 13, Chapter 13) and regulation (Code of Federal Regulations, Title 15, Part 30) to enable the Census Bureau to compile the official U.S. export statistics and the Bureau of Export Administration (Commerce), the U.S. Customs Service, the State Department and other U.S. Government Agencies to enforce U.S. laws relating to exporting.
- Is a Shipper's Export Declaration (SED) required on every export shipment?
An SED is required on every licensed export shipment and on all non-licensed export shipments in which the value of any Schedule B commodity number exceeds US$ 2500.
- Who is responsible for completing the Shipper's Export Declaration (SED) for an export shipment?
The exporter or an authorized agent of the exporter.
- For Shipper's Export Declaration (SED) purposes, who is the "exporter"?
The exporter is: a person in the U.S.; a firm; a government agency, department, or commission; and any other association or organization, whether or not organized for profit, organized under the laws of the U.S., who is also the U.S. principal party in interest in export transaction. The exporter can be the:
- U.S. manufacturer (if seller of the merchandise for export);
- U.S. seller (wholesaler/distributor selling merchandise for export);
- U.S. order party (U.S. party who negotiated with the foreign buyer and received the order to sell the merchandise);
- A foreign person/entity (if in the U.S. at the time of export and prepares and files the SED in the U.S.;
- A forwarding agent (when they are the "applicant" and "licensee" on an export license);
- A freight forwarder on behalf of a foreign company not under U.S. jurisdiction at time of export.
- Are there any exemptions that excuse an exporter from filing a Shipper's Export Declaration (SED)?
Yes. Such exemptions include the following: (a) the low value exemption for shipments in which the value of each Schedule B commodity number is less than US$ 2500; (b) non-licensed export shipments to Canada; and (c) hand-carried merchandise (including "tools of the trade") taken out of the country by its owner.
- What does an exporter have to do to take advantage of a Shipper's Export Declaration (SED) filing exemption?
An exporter has to include on the documents provided to the carrier a statement, which indicates that no SED is required and which references the applicable exemption.
- When is an exporter required to file a Shipper's Export Declaration (SED)?
An exporter must file an SED prior to exporting the associated shipment from the U.S.
- What does a freight forwarder do?
A freight forwarder performs services to facilitate the export of the goods, including arrangements for the transportation and delivery.
- What is a related party transaction?
A related party transaction is a transaction that involves trade between affiliated companies where one person or business exercises a 10% interest in both the exporter and ultimate consignee. Shipments to independent distributors are considered non-related, unless there is 10% control.
- What is a Schedule B number?
Schedule B is the Statistical Classification of Domestic and Foreign Commodities Exported from the United States. Schedule B contains approximately 8,000 individual 10-digit commodity numbers covering everything from live animals and food products to computers and airplanes, including a distinction between civilian and military airplanes. Every item being exported falls under a particular Schedule B number.
- What is an HTS number?
An HTS number is an import statistical reporting number found in the Harmonized Tariff Schedule of the U.S.
- What is the Harmonized System (HS)?
The HS is an international system used by the United States and most of our trading partners as the basis for reporting statistics as well as the collection of import duties. The first six digits of both Schedule B and the HTS is the HS number.
- Who is the intermediate consignee in an export transaction?
The intermediate consignee is the bank, forwarding agent, or other intermediary (if any) who acts in a foreign country as an agent for the exporter, the purchaser, or the ultimate consignee, for the purpose of effecting delivery of the items to the ultimate consignee.
- Who is the ultimate consignee in an export transaction?
The ultimate consignee is the party actually receiving the merchandise in an export transaction. The person located abroad who is the true party in interest in actually receiving the export or reexport for the designated end-use.
- What is the country of ultimate destination in an export transaction?
The country where the goods are to be consumed, further processed, or further manufactured.
- What is an Export Management Company?
An Export Management Company (EMC) is a private firm that serves as the export department for several manufacturers, soliciting and transacting export business on behalf of its clients in return for a commission, salary, or retainer plus commission.
- What is an Export Trading Company?
An Export Trading Company (ETC) is a corporation or other business unit organized and operated principally for the purpose of exporting goods and services, or of providing export related services to other companies. An ETC can be owned by foreigners and can import, barter, and arrange sales between third countries, as well as export.
- What is the debarred persons list?
This list (a.k.a. Debarment List) is a list of persons who have been precluded by the State Department from participating—either on a direct basis or on an indirect basis—in any transaction which requires a State Department license or State Department approval. Transactions that require State Department licenses and State Department approvals are transactions involving the export of defense articles, defense services and the technical data related to defense articles and defense services.
- What is the denied persons list?
This list (a.k.a the Denial List) is a list of persons (denied persons) who have been denied export privileges by the Commerce Department (denial orders) because they have, or are believed to have, violated the Export Administration Act or the Export Administration Regulations (EAR). Denial orders are designed to cut off the access of denied persons to U.S.-origin items by denying such parties the right to export and by prohibiting third parties from dealing with a denied party in a transaction involving U.S. items.
- What is the specially designated nationals list?
This list (a.k.a. the SDN List) is a list comprised of individuals and entities with which U.S. persons are precluded from dealing. The individuals and entities on the SDN List were placed on the SDN List because they are associated with international narcotics or terrorism or because they are owned or controlled by, or acting for or on behalf of, the governments of countries which the U.S. considers to be hostile to U.S. foreign policy or national security objectives.
- What is the Entity List?
The Entity List is maintained by the Commerce Department to provide notice and to inform the public of certain entities that are of concern to Commerce because of their suspected involvement in the proliferation of chemical or biological weapons, nuclear weapons or explosive devices and missile systems. Based on Commerce's concerns in this regard, Commerce has subjected the entities on the Entity List to licensing controls on the export and re-export of specified items. If the specified items for a particular entity are "all items subject to the EAR", then a license is required for all exports and re-exports to the named party. However, if the Entity List specifies a narrow product category such as computers, then—absent other issues which cause the need for an export license—only the export or re-export of a computer to that party requires a license. The license requirement for the specified items exist regardless of the actual end use.
- What is export clearance?
Export clearance is the process of completing and filing all paperwork required to export products from the U.S., such as export license applications and shippers export declarations.
- What is the Automated Export System (AES)?
AES is an electronic reporting system jointly developed by Census and Customs which allows exporters to electronically transmit to Census the information required on Shippers' Export Declaration (SED).
- What is the difference between EAR99 and NLR?
EAR99 is a classification for an item. It indicates that a particular item is subject to the Export Administration Regulations (EAR), but not listed with a specific Export Control Classification Number (ECCN) on the Commerce Control List (CCL). While the classification describes the item, the authorization for shipment of that item may change, depending on the transaction. NLR is the designator of a transaction that stands for the "No License Required" authorization. NLR may be used for either EAR99 items, or items on the CCL that do not require a license for the destination in question, provided no General Prohibitions apply.
- What is the Commerce Control List?
A list of items under the export control jurisdiction of the Bureau of Export Administration, U.S. Department of Commerce.
- What are Encryption Items?
The phrase encryption items include all encryption commodities, software, and technology that contain encryption features and are subject to the EAR. This does not include encryption items specially designed, developed, configured, adapted or modified for military applications (including command, control and intelligence applications) that are controlled by the Department of State on the U.S. Munitions List.
- What is an Export Control Classification Number (ECCN)?
An ECCN is a reference number in a series of reference numbers that the Commerce Department has assigned to various products considered to be dual use items that are subject to export controls administered by the Commerce Department.
- What is foreign policy control?
It is a type of export control imposed under the EAR for any and all of the following reasons: chemical and biological weapons, nuclear nonproliferation, missile technology, regional stability, crime control, anti-terrorism, or United Nations Sanctions.
- What are the General Prohibitions?
The ten prohibitions found in part 736 of the EAR prohibit certain exports, reexports, and other conduct, subject to the EAR, absent a license, license exception or determination that no license is required ("NLR").
- What is a Commerce Department export license?
Authority issued by the Bureau of Export Administration authorizing an export, reexport, or other regulated activity. The term "license" does not include authority represented by a "License Exception".
- What does NLR mean?
NLR ("no license required") is a symbol entered on the Shipper's Export Declaration, certifying that no license is required.
- What is the Office of Foreign Assets Control (OFAC)?
The OFAC is part of the Department of the Treasury, and is responsible for blocking assets of foreign countries subject to economic sanctions, controlling participation by U.S. persons, including foreign subsidiaries, in transactions with specific countries or nationals of such countries, and administering embargoes on certain countries or areas of countries.
- What kind of export-related certificates does the FDA issue?
The FDA issues the following export-related certificates:
A. The “Certificate to Foreign Government” for products that may be legally marketed, sold or distributed in the U.S.
B. The “Certificate of a Pharmaceutical Product” for human drugs and biological products which conform to the World Health Organization’s standards.
C. The “Certificate of Exportability” for products that may not be marketed, sold or distributed in the U.S. but which may be legally exported from the U.S.
D. The “Certificate of Free Sale” for food products, dietary supplements and cosmetics marketed, sold, distributed, or offered for sale in the U.S.
E. The “EU Export Health Certificate” for animal-derived products exported to the European Union.
