US Export Compliance: What Documents, Information, and Evidence Do You Need to Have?

As an exporter, you must be aware of US export control laws, which are designed to protect national security and foreign policy interests.

Various US departments and agencies administer these export controls. Currently, the Obama administration, through its Export Control Reform Initiative, is trying to bring all controls under the purview of a single agency, thus making it easier to control and enforce compliance. Until such reform occurs, the terrain of US Export Laws and Governance structure as presented in this article constitutes the state of the game.

Before we get into the discussion of export controls, let’s clarify a common definition that is relevant and general across all controls, that is, the definition of US Person v/s Foreign Person. Under US Export Laws: ‘A “US Person” is any US citizen, permanent resident alien, or person admitted as an asylum seeker into the United States; or a legal entity organized under US law. Any individual/entity that does not fall within the above definition will be treated as a “foreign person”. ‘

Let us now briefly review the various types of export controls that prevail under US law.

trade liens: The Office of Foreign Assets Control (OFAC) imposes trade embargoes on a list of countries, individuals, and groups and is dictated by US foreign policy imperatives. The imposition can go into effect or can be lifted in a quick succession and will depend on world events that unfold. OFAC’s website contains a country-by-country description of each embargo. The website also provides the list of Specially Designated Nationals (SDN) which is made up of individuals and companies acting on behalf of the targeted countries. Also this list has groups and individuals who are terrorists, drug dealers, nuclear proliferators, diamond dealers. These entities are not nationality specific. Trading with SDNs is prohibited as they are detrimental to the national interests of the United States. It is recommended to read the trade restrictions carefully, as the restrictions are not uniform in all embargoed countries.

Dual-use items or technologies: There are a wealth of technology and products, as well as services that have both civil and military applications and are covered by the Export Administration Regulations (EAR) administered by the Bureau of Industry and Security (BIS). The BIS list of technologies that are designated as “dual-use” is known as the CCL or Trade Control List. Reading the CCL against the EAR can help determine if a given technology would require a BIS export license. BIS also has an ‘Unverified List’, which has entities that are categorized as suspicious, although no restrictions have been placed on them, should raise a red flag and US companies should proceed with caution when dealing with entities on the ‘Unverified List’. ‘. The point for determining the license requirement under the EAR is the generation of an Export Control Classification Number (ECCN) of the good/technology/service to be exported. , a license application must be submitted to BIS.

EAR 99 list: Non-CCL items fall under the jurisdiction of the US Department of Commerce and do not require a license in most situations. They are mainly made up of low-tech consumer goods. However, if EAR99 goods are to be shipped to embargoed countries, or denied persons or sanctioned entities, a BIS license may be required.

Products and technical data of the “List of ammunition”: Technology, products, services, and data that have primary or exclusive use for military purposes and are listed on the United States Munitions List (USML) are controlled by the International Traffic in Arms Regulations (ITAR). The application is in charge of the Directorate of Defense Trade Controls (DDTC). Affected exporters must register with DDTC and a DDTC code will be assigned to them. DDTC will have to approve any transaction under the USML before commerce can take place with a foreign person, including a foreign person residing within the United States. Therefore, any international transaction subject to ITAR will need to obtain a license. Licensing is done online through “D-Trade” and is issued only to DDTC registered companies. No matter where you open your business in the US, starting a business is always going to be hard work and you need to know the procedures. For example, if you are looking for BVI company registration, you should know the necessary rules on how to do it.

sanctions: The consequence of violating export control laws includes civil penalties, criminal prosecution, and also possible ineligibility to export goods or services. Export control agencies may audit or verify records to satisfy themselves that a company is not violating any of the export control provisions. It is imperative that exporting companies maintain proper records.