The Importance of Understanding Export Administration Regulations (EAR)
Understanding Export Administration Regulations is especially important for businesses today because of the prevalence and ease of conducting international trade in today’s world. Many businesses learn too late the consequences of remaining ignorant of federal export laws. Unfortunately, ignorance is not a defense.
Title 15 of the Code of Federal Regulations
The Export Administration Regulations (EAR) are comprised of a set of regulations in Title I5 of the Code of Federal Regulations. These regulations are enforced by the Bureau of Science and Industry. While the EAR is not the sole set of regulations, it is the set that covers the broadest range of items for export and reexport.
Other regulations include:
- International Trade in Arms Regulations (ITAR) which controls defense articles and services listed on the U.S. Munitions List (22 CFR part 121).
- Treasury Department, Office of Foreign Assets Control (OFAC) which controls embargoes on specific nations.
- U.S. Nuclear Regulatory Commission (NRC) which controls the export and reexport of nuclear materials and technologies.
What is an Export Under EAR?
An export can be a tangible or intangible item. Intangible items include software, technology, or information. This means that in certain cases a telephone call, email, or conversation could be deemed an export and could violate federal regulations. This means that for effective export compliance, a large sector of a business must be involved, not just those directly involved with sales.
EAR Export Classification
The first action any business must perform when seeking to export a product is to perform an Export Control Classification. Items which are not controlled under ITAR or other regulations will fall under the EAR. EAR classifications are designated by a five-character alpha numeric code. Most items will fall under the classification of EAR99 which means they are not specifically controlled for export. Other classifications are for items that may be controlled because of its specific performance characteristics, qualities, or designed-end use. Export of these items are very specifically defined and may be restricted or require licensing dependent on country of intended export.
Even if an item is deemed EAR99 you must ensure the item is not going to an embargoed or sanctioned country, a prohibited end-user, or used in a prohibited end-use. These criteria must be documented for every transaction. Furthermore, Schedule B Code export numbers are required to be reported to the Foreign Trade Division for the collection of U.S. export statistics.
CVG Strategy Can Help
Export Compliance is important. Failure to comply with regulations can result in criminal prosecution including imprisonment and fines. It can also result in civil penalties and disbarment from export activities. Your business cannot afford to have its reputation ruined by a failure to comply.
CVG Strategy can help you in understanding Export Administration Regulations and establishing a coherent and effective export compliance system. We can perform export control classifications, perform audits, and educate your team. Regardless of whether your business falls under EAR or ITAR, CVG Strategy has the expertise to help. Contact Us with you export regulation questions.