When the ECCN (Export Control Classification Number) comes up on export documents many shippers automatically enter EAR 99. For license questions NLR (No License Required) is often used as a default entry. While these may be the correct entries, it is a good business practice to check and confirm.   Logistics providers can offer expertise in these areas but the exporter bears primary responsibility for compliance.

As part of any Export Management Program, exporters need to make sure they are using correct commodity classifications and license exceptions. Your commodities may be listed on the  CCL (Commerce Control List) in which case EAR 99 is not valid.  If you are automatically using NLR and EAR 99 you may be at risk.  According to EAR part 732 “For items subject to EAR but not listed in CCL the proper classification is EAR 99. EAR 99 is a basket for items not specified under CCL and appears at the end of each Category on the CCL.”

Licensing is a function of both the ECCN and country of ultimate destination. If you determine that your commodity is listed on the CCL the next step is checking license requirements. Here is some info from the BIS (Bureau of Industry and Security) website:

Country Guidance

The country of ultimate destination is a key factor in determining license requirements administered by the Bureau of Industry and Security (BIS) pursuant to the Export Administration Regulations (EAR). BIS maintains the Commerce Country Chart to use in conjunction with other portions of the EAR to determine whether a license is required.  Please review Part 732 of the EAR for additional information on how to use the EAR, including the Commerce Country Chart.

For immediate assistance with exports contact mitch@52.91.45.227 .

Exporters, do you know how to determine your ECCN? While it is true that the majority of exports can be designated EAR 99 and NLR (No License Required), it is important to first check for an ECCN.

There are three ways to determine ECCN: 1) self classify, 2) consult manufacturers of commodities, 3) request a classification by BIS.

Here is some info from the BIS (Bureau of Industry and Security) website.

Export Control Classification Number (ECCN)

A key in determining whether an export license is needed from the Department of Commerce is finding out if the item you intend to export has a specific Export Control Classification Number (ECCN). ECCNs are five character alpha-numeric designations used on the Commerce Control List (CCL) to identify dual-use items for export control purposes.  An ECCN categorizes items based on the nature of the product, i.e. type of commodity, software, or technology and its respective technical parameters.

An ECCN is different from a Schedule B number, which is used by the Bureau of Census to collect trade statistics. It is also different from the Harmonized Tariff System Nomenclature, which is used to determine import duties.

Contact mitch@52.91.45.227 for help with exports

The United States International Trade Commission has updated the Harmonized Tariff Schedule of the United States effective 01/01/2017.

It is a good business practice to review your Harmonized codes at least once per year to make sure you are using the most up to date classifications. For help with your codes contact mitch@52.91.45.227

http://www.usitc.gov/tata/hts/index.htm

Published on LinkedIn today:

Clients often know that they need help with export compliance but don’t know where to start. A well written and maintained Export Management and Compliance Program is the ideal way to keep compliant and there is no question that a written EMCP is a good investment for any company to make. An EMCP establishes clear accountability, written instructions, and reduces risk of non-compliance. However, an EMCP is costly and time consuming, requiring a significant commitment on the part of management. If the exporter has not experienced problems or incurred any fines it is easy to make an EMCP a “back burner” issue. There is considerable risk in being non-compliant, so don’t make the mistake of doing nothing because you are not in a position to implement an EMCP. A few best practices can help. To get started I suggest the following:

• Review and confirm correct Harmonized Tariff and Schedule B codes in January and July as updates occur.
• Check EAR regulations for correct ECCN and license exemption codes. Are you automatically using EAR99 and NLR? Help is available @ bis.gov.
• If exporting under ITAR you need a responsible trained officer.
• Check common “Red Flags” such as denied parties lists, entities lists, and unverified lists. Once again, bis.gov provides details and training.
• Review export documentation for possible improvements. Your forwarder can be a good resource here but the exporter has ultimate responsibility for compliance.
• Make export compliance a front-end process not a last minute shipping function.

While risk management always gets C-level attention, export compliance is often a mid-management or lower level function. Fines and penalties for violations should make export compliance a basic part of risk management.  Best practices, including an Export Management  & Compliance Program,  will reduce exposure to steep fines and penalties. Don’t leave this responsibility to your shipping department!  Here is some information from the BIS (Bureau of Industry and Security) website showing details. For help with export compliance contact mitch@52.91.45.227

Penalties

Violations of the Export Administration Act of 1979, as amended (EAA), 50 U.S.C. app. §§ 2401-2420 (2000), and the Export Administration Regulations, 15 C.F.R. Parts 730-774 (2007) (EAR) may be subject to both criminal and administrative penalties. When the EAA is in effect, criminal penalties can reach 20 years imprisonment and $1 million per violation. Administrative monetary penalties can reach $11,000 per violation, and $120,000 per violation in cases involving items controlled for national security reasons. When the EAA is in lapse, the criminal and administrative penalties are set forth in the International Emergency Economic Powers Act (IEEPA).

On October 16, 2007, President Bush signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act, Public Law No. 110-96, amending IEEPA section 206. The Act enhances criminal and administrative penalties that can be imposed under IEEPA and also amends IEEPA to clarify that civil penalties may be assessed for certain unlawful acts. Criminal penalties can reach $1,000,000 and 20 years imprisonment per violation and the administrative penalties can reach the greater of $250,000 per violation or twice the amount of the transaction that is the basis of the violation. See Endnote below.

Violators may also be subject to denial of their export privileges. A denial of export privileges prohibits a person from participating in any way in any transaction subject to the EAR. Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.

The United States International Trade Commission has updated the Harmonized Tariff Schedule of the United States. This revised edition of the 2016 Harmonized Tariff Schedule takes effect July 1, 2016.

It is a good business practice to review your codes at least once per year to make sure you are in compliance. For help with your codes contact mitch@52.91.45.227

http://www.usitc.gov/tata/hts/index.htm

All C-level executives are justifiably concerned with risk management. Best practices in export compliance will reduce exposure to steep fines and penalties. Previous posts have described the risks of non compliance with Export Administration regulations. Here is some information from the BIS (Bureau of Industry and Security) website showing details. For help with export compliance contact mitch@52.91.45.227

Penalties

Violations of the Export Administration Act of 1979, as amended (EAA), 50 U.S.C. app. §§ 2401-2420 (2000), and the Export Administration Regulations, 15 C.F.R. Parts 730-774 (2007) (EAR) may be subject to both criminal and administrative penalties. When the EAA is in effect, criminal penalties can reach 20 years imprisonment and $1 million per violation. Administrative monetary penalties can reach $11,000 per violation, and $120,000 per violation in cases involving items controlled for national security reasons. When the EAA is in lapse, the criminal and administrative penalties are set forth in the International Emergency Economic Powers Act (IEEPA).

On October 16, 2007, President Bush signed into law the International Emergency Economic Powers (IEEPA) Enhancement Act, Public Law No. 110-96, amending IEEPA section 206. The Act enhances criminal and administrative penalties that can be imposed under IEEPA and also amends IEEPA to clarify that civil penalties may be assessed for certain unlawful acts. Criminal penalties can reach $1,000,000 and 20 years imprisonment per violation and the administrative penalties can reach the greater of $250,000 per violation or twice the amount of the transaction that is the basis of the violation. See Endnote below.

Violators may also be subject to denial of their export privileges. A denial of export privileges prohibits a person from participating in any way in any transaction subject to the EAR. Furthermore, it is unlawful for other businesses and individuals to participate in any way in an export transaction subject to the EAR with a denied person.

In  previous posts we have emphasized the importance of an annual review of Harmonized Tariff codes as a good business practice. Another good practice is to make sure you are taking advantage of regulations that allow importing on a duty free or preferential basis. Here are a few items for your annual customs review. Contact mitch@52.91.45.227 if you need help.

• Classification– review annual updates to Harmonized Tariff to make sure your codes and descriptions are accurate. Proper classification and valuation of imported goods are the first step in compliance. If you do nothing else, do this.
• Duty Drawback– this is a refund of duties paid on imports that are later exported. Record keeping is key here.
• Chapter 98 of the Harmonized Tariff allows duty free entry of certain categories of goods. Examples are: American Goods Returned, American Goods Repaired or Altered Abroad, and American Components Assembled Abroad.
• Trade agreements– programs which allow duty free or reduced duty rate entries. There are many agreements (such as NAFTA) in place.
• Customs rulings– consider requesting formal customs rulings prior to large transactions. This ensures compliance and eliminates uncertainty about imports. Rulings can be requested thru the CBP website.
• Correcting errors– when an entry mistake is discovered it can be corrected by a prior disclosure to CBP. The formal process is a Post-Entry Amendment/Post Summary Correction. A prior disclosure can help mitigate penalties.