Export Control Classification Determination Considerations
Export Control Classification Requirements
Export Control Classification is required of businesses selling products that fall under the jurisdiction of any federal regulations. An export can include sale of goods within the United States to a person or entity that is not a U.S. person. A transfer of technical data can also be considered an export which can be conducted by means of a phone call or email.
Export Control Classification begins with the defining the technical specifications for the item to be transferred. This applies to actual shipments as well as transfers of technical data. It is important to note that a given product may fall under numerous classifications based on how regulations are interpreted.
It is essential to ensure that a thorough analysis be conducted to ensure that due diligence for compliance has been met. Therefore it is not prudent to rely on a customer’s or supplier’s classification as there are severe consequences for non-compliance.
Performing an Export Classification
Types of Import and Export Regulations:
The following groups of regulations should be reviewed when determining the classification for an item for export or import:
- United States Munitions List (USML) – The USML is a list articles intended for defense applications including those items that were specifically designed, developed, configured, adapted or modified for a military applications. The USML is controlled by the International Traffic in Arms Regulations (ITAR).
- Export Control Classification Number (ECCN) – The ECCN is a five-character alpha-numeric designation used to identify items that are controlled under the Commerce Control List (CCL). The ECCN is controlled by the Export Administration Regulations (EAR) and is administered by the Bureau of Industry and Security (BIS).
- Harmonized Tariff Schedule of the United States (HTS) – The HTS is a ten-digit number assigned to goods imported into the United States that help U.S Customs and the importer determine the rate of duty.
- Schedule B – The Schedule B is used by the U.S. Census Bureau to track the amount of trade goods that are being exported from the United States. For most goods, the HTS can be used instead of the Schedule B.
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:
- what is the export control classification of the article (item) or technology (documents, photos, technical data)
- where it is going
- who is the end-user or recipient of the technology transfer
- what is the end-use
Conducting an Export Control Classification
Step 1: Establish if article is ITAR Controlled – USML Category (Exports)
Review the U.S. Munitions List (USML) to self-assess if your export (hardware, technical data, and/or defense services) is ITAR controlled.
Step 2: Determine if the article is EAR Controlled (Exports)
If your item is subject to the jurisdiction of the U.S. Department of Commerce, you must then determine if your item has a specific Export Control Classification Number (ECCN) found on the Commerce Control List (CCL). Keep in mind that items subject to the Export Administration Regulations (EAR) that are not listed on the CCL are designated EAR99. There are three ways to determine the Export Control Classification Number (ECCN) for your product.
a. Go to the Source
Contact the manufacturer, producer, or developer of the item you are exporting to see if they have classified their product and can provide you with the ECCN. If they have exported the item in the past, it is likely they have the ECCN. Keep in mind that ECCNs may change over time, so please review the ECCN to be sure you are in agreement.
In order to perform a self-classification, you must have a technical understanding of your item, and you need to be familiar with the structure and format of the CCL. The CCL is divided into ten categories, represented by the first digit of the ECCN. Each of the ten categories is divided into five product groups, represented by the second digit of the ECCN. Once the appropriate category and product group are identified, match the particular characteristics and functions of your item to one of the specific ECCNs that follow.
c. Request an official export classification request
Submit a commodity classification request online through the Simplified Network Application Process – Redesign (SNAP-R). You must obtain a Company Identification Number (CIN) before accessing the online SNAP-R system and submitting your request.
Step 3: Determine your HTSUS Classification (Imports)
The HTSUS is broken down into two parts. The first part contains the rules of classification, recognized countries and abbreviations, details about region-specific trade programs, and a list of recent changes. The remainder of the HTSUS designation are the classification codes which detail the duties applicable to the imported commodities. The World Customs Organization updates the HS System approximately every five years.
Step 4: Evaluate and select your Schedule B Code (Exports)
Schedule B items are administered by the U.S. Census Bureau, Foreign Trade Division. A Schedule B number is a 10-digit number used in the United States to classify physical goods for export to another country.
These Schedule B numbers are required to be reported in the Automated Export System (AES) when shipments are valued over $2,500 or the item requires a license. Missing entry of the Schedule B can result in fines and confiscation of shipments.
CVG Strategy Export Compliance Expertise
CVG Strategy experts can help you with export control classification of articles and technology. Our specialists have classified thousands of products, services and technology over the years. Contact us now for more information.
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