Export Control Classification is Determined by the Technical Characteristics and the Application of the article.
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. One company’s export control classification may or may not be the same as another, because it depends on how the regulations are interpreted. And, if your customer has one classification they have made on an article, this is not necessarily the one your company may use nor is their any regulatory responsibility for you to accept a differing export control classification.
United States Export and Import Classifications:
- United States Munitions List (USML) – The USML is a list of defense articles and services that were specifically designed, developed, configured, adapted or modified for a military application.
- 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).
- 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, next step is to evaluate whether or not authorization is required to export the article or transfer technology to foreign persons. 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) where it is going
3) who is the end-user or recipient of the technology transfer
4) what is the end-use
While the majority of U.S. commercial exports do not require a license, the first step in this process is determining the correct classification of your item. Almost all ITAR or Dual-Use exports require a license.
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. All company’s must assess if their product or service is described on the USML (part §121.1(b) of the ITAR).
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, and knowing what each section means will help you better understand classification. First, are the notes which contain 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 is the classification code which details the headings, subheadings, quantity, and duties applicable to the imported commodities. The World Customs Organization updates the HS System approximately every five years.
The anatomy of the HTS Code is as follows: xxxx . xx . xx . xx. Example: 3901.10.00.00 designates plastics and articles thereof; more specifically, polymers of ethylene, in primary forms. The first two digits (39) of this classification are a reference to the appropriate chapter. The first four digits together (3901) detail the article’s heading within that chapter, and the last six digits (10.00.00) refer to the applicable subheadings. *It’s important to note that the first six digits are harmonized with every country that participates in this classification system, but the last four vary from nation to nation. This is because the first six digits are for classification and the last four digits refer to applicable duties that are individually established by each country.
Step 4: Evaluate and select your Schedule B Code (Exports)
Schedule B are administered by the U.S. Census Bureau, Foreign Trade Division, both rely on the international HS codes for their 4- and 6-digit headings and subheadings. A Schedule B number is a 10-digit number used in the United States to classify physical goods for export to another country. The Schedule B is based on the international Harmonized System (HS) of 6-digit commodity classification codes. There is a Schedule B number for every physical product, from paperclips to airplanes.
Schedule B numbers are used by the U.S. Commerce Department, Census Bureau, Foreign Trade Division to collect and publish the U.S. export statistics. 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 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.