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Export Administration Regulations
EAR Compliance

What Are Export Administration Regulations?

Export Administration Regulations (EAR) control the export of commodities by prohibiting or placing licensing requirements on specific items.  the term commodities can include software, technology, and intellectual properties.  The specific regulations of the EAR can be found in 15 CFR §730.

The EAR are administered and enforced by the Bureau of Industry and Security (BIS).  Items controlled under the EAR are listed in the Commerce Control List (CCL), and identified by a unique Export Control Classification Number (ECCN).  Prohibition of export or requirements for licensing are based on the classification of the item, the destination of export, the end user, and the end use of the item. 

Export as defined by the EAR extends beyond the shipment of a commodity to a foreign country.  Under the EAR an export can include a “deemed export” which is defined as the transfer of protected technology or information to a foreign destination or release of protected technology or information to a foreign person in the United States. 

Export Administration Regulations

Export Compliance Program Requirements for EAR

To effectively manage an organization involved in the export of items controlled under the EAR, the BIS has requirements for the establishment of a viable Export Compliance Program (ECP).  When designing such a program it is important to note that the program should be tailored to the nature of the business involved. 
 
This should include factors such as the size of the business, the amount of products or services exported, and geographical areas exported to.  Additionally the design of a program should take into consideration any additional requirements that may be required for the International Traffic in Arms Regulations (ITAR) by the Department of State. 
 
A complete set of requirements can be found on the BIS Export Compliance Guidelines.  Elements of a well constructed compliance program for EAR should include:
  • A top down commitment from company leadership to ensure provision of adequate program resources.
  • A risk assessment process that identifies organizational vulnerabilities and develops mitigations.
  • Documented procedures for export authorization that include determination of jurisdiction, classification, license determination and screening.
  • Record keeping protocols in accordance with Part 752 of the Export Administration Regulations.
  • Adequate training of individuals in the organization appropriate to their level of activity in the program.
  • Auditing that regularly checks for level of effectiveness and inconsistencies of performance.  This includes internal and external auditing.
  • Procedures for corrective actions in the event of an export violation.

Export Control Classification For EAR

When conducting an export control classification for an item, it is first important to review the United States Munition List (USML)  to determine if the hardware, technical data, and or defense services is controlled under the International Traffic in Arms Regulations (ITAR). 
 
If the item does not fall under the ITAR then a classification should be conducted to determine if it falls under the EAR as enumerated in the CCL.  The manufacturer, producer, or developer of the item should be consulted to determine if they have classified their product.  If they have exported the item in the past, it is likely they have the ECCN.  This can be used for initial guidance but it is ultimately the responsibility of the final exporter to classify an item.
 
It is important to remember that ECCNs may change over time.  If the commodity is not found to be enumerated in the ECCN it is classified EAR99 meaning that it does not require a license in most situations.  Care should be taken, however, to ensure that the item is not being exported to an embargoed country, in support of prohibited end-use or a sanctioned party.
 

Once the Export Control Classification has been defined, a determination can be made as to whether or not authorization is required.  The following criteria in the transaction must be documented and reviewed:

  1. What is the export control classification of the article (item) or technology (documents, photos, technical data)?
  2. What is the final destination of the exported item?
  3. Who is the end-user or recipient of the technology transfer?
  4. What is the actual end-use of the item to be exported?

Screening all parties involved in the export process is very important.  This includes parties involved in export, reexport, or in country transfer of goods.  As a preliminary measure all parties should be vetted through the Consolidated Screening List.  For the EAR this list includes the Denied Persons List, Unverified List, Entity List, and the Military End User List.

Other Federal Export Controls

The EAR is not the only set of regulations for export.  The International Traffic in Arms Regulations (ITAR) control defense articles specifically designed for military end-use.  These items are categorized in the United States Munitions List (USML).

The ITAR is administered by the Directorate of Defense Trade Controls (DDTC).  Other export controls include:

  • Antiboycott Regulations per the Department of Commerce’s Office of Anti-Boycott Control (OAC)
  • U.S. Department of the Treasury’s Internal Revenue Service (IRS)
  • U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC)

Export Compliance Consulting at CVG Strategy

CVG Strategy, LLC is recognized the world over as the premier provider of customized export compliance programs.  This includes ITAR and  Export Administration Regulations (EAR).  We also can provide assistance with the Canadian Goods Program.

Our ITAR compliance consultants work with businesses of all sizes.  We have the compliance and training programs to fit your exact needs.  We even serve as an outsourced Export Compliance Officer for some clients, who don’t have the bandwidth to dedicate to the function but need it done on a part-time basis.

ITAR Training

CVG Strategy’s ITAR Training Basics provides interesting and informative education that is targeted at improving export compliance programs.

We have provided top level training to business professionals for over a decade.  Our classes can help you understand the basics workings of the International Traffic in Arms Regulations (ITAR) and Export Administration Regulations (EAR).

Export Compliance Training

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