U.S. Export Controls: Am I subject to the EAR?
- Arne Mielken
- Aug 26, 2023
- 5 min read
Businesses concerned by US Export Control must first answer this fundamental question to decide if US law bites. Learn what you need to know and do.
Export controls are restrictions imposed by governments on the tangible and intangible movement of certain goods software and
technology and on the provision of technical assistance related to controlled items and other restrictions on trade.
In the U.S. this is controlled through the Export Administration Regulations (EAR). It is managed by the department of commerce.
The EAR regulates:
Export
Import
Reexport
Retransfer
These activities can involve:
Hardware
Software
Technical data
Technology
Other services depending on the transaction.
The US EAR provides for "Steps for Using the EAR" in Part 732.
It is intended to provide an overview of the steps to be taken for certain requirements in the EAR, though not all of them.
Are your items and activities subject to the EAR? Work through the 6 steps
You should first determine whether your commodity, software, or technology is subject to the EAR (see part 734 of the EAR concerning scope), and Steps 1 through 6 help you do that.
For exports from the United States, only Steps 1 and 2 are relevant.
If you already know that your item or activity is subject to the EAR, you should go on to consider the ten general prohibitions in part 736 of the EAR.
If your item or activity is not subject to the EAR, you have no obligations under the EAR and may skip the remaining steps.
The six steps are summarised in this flowchart:
10 prohibitions
If your item or activity is subject to the scope of
the EAR, you should then consider each of the ten general prohibitions listed in part 736 of the EAR. These are:
Export and reexport of controlled items to listed countries (Exports and Reexports)
Reexport and export from abroad of foreign-made items incorporating more than a de minimis amount of controlled U.S. content (U.S. Content Reexports)
Reexport and export from abroad of the foreign-produced direct product of U.S. technology and software (Foreign-Produced Direct Product Reexports)
Denial Orders — Engaging in actions prohibited by a denial order
Export or reexport to prohibited end-uses or end-users (End-Use End-User)
Export or reexport to embargoed destinations (Embargo)
Support of Proliferation Activities (U.S. Person Proliferation Activity)
In transit shipments and items to be unladen from vessels or aircraft (Intransit)
Violation of any order, terms, and conditions (Orders, Terms, and Conditions)
Proceeding with transactions with the knowledge that a violation has occurred or is about to occur (Knowledge Violation to Occur)
Licence Requirements - Export Control Decision Making Tree
To complete the answer of what happens when a business is subject to the EAR, a second decision-making tree must be considered:
More Information
Download Steps for working with the EAR
Find out more about Export Controls
Read our dedicated Export Control Blog, always updated with the latest information:
Learn about Export Controls in the U.S.
Get certified as an export control practitioner by completing our flexible online training.
With our online training on US Export Controls, we take a step-by-step approach to explain the impact of US extraterritorial export controls on the activities of non-US companies, whether based in the UK, EU or elsewhere. It describes best practice in keeping risks in check and ensuring compliance with stringent US laws.
The learning will allow you to apply the learnings directly in your company and
Identify US licence requirements
Apply for available licences with US authorities - Build an Internal Compliance Programme
…while guiding your company, suppliers, and customers through the complexity of US export controls with confidence and precision.
Showcase your achievement
Completion of the course unlocks a quiz for consolidating learning. Once successfully passed, participants will receive a Certificate of Completion.
What you will learn
Lesson 1: Introduction to US export controls: the What? Who? Why? Where? When? How?
Gain essential knowledge to be able to follow conversations and discuss with US colleagues or authorities on US export control matters. We explain the authorities’ understanding of export controls and elaborate on essential definitions such as re-export, de minimis and the secondary incorporation principle. We give an overview of the Export Administration Regulations (‘EAR’) implemented by the Bureau of Industry and Security (‘BIS’), which is part of the US Department of Commerce, and the International Traffic in Arms Regulations (‘ITAR’), administered by the Directorate of Defense Trade Controls (‘DDTC’), a division of the US Department of State.
Lesson 2: Am I subject to the EAR?
This is the key question that companies need to answer if they are exporting US goods. Failure to give it proper consideration may result in a violation of US export control regulations. In this session, we concentrate on how to understand and address this question. We find out about the 10 key prohibitions, and work through practical flowcharts to ensure you get it right – every time!
Lesson 3: Dealing with US content in my exports: de minimis unlocked
Are you making a product that incorporates US origin-controlled content? If so, you need a thorough grounding on de minimis rules, which determine how much US content you are permitted to incorporate before triggering the need for an export control authorisation. In this session we look at how applicable de minimis percentages are calculated, and work through practical examples. We explore the de minimis & direct product rules decision tool and the critical ‘second incorporation’ principle.
Lesson 4: Understanding the Commerce Control List (‘CCL’) – once and for all
Assessing whether and how your products are subject to the EAR is complex, and reading the CCL correctly requires understanding a suite of inter-related elements: the logic of classification, the constituent parts of the CCL, and its relationship to other control lists. Having such an understanding makes all the difference between applying for unnecessary licences or failing to get necessary licences, thus jeopardising US business, and developing a business-enabling licensing strategy that works for your company’s commercial goals, not against them! We examine how the CCL should be read, identify ‘Reasons For Control’, provide a helpful decision-making diagram, and explain the meaning of EAR99, the most common licence exceptions and country groups.
Lesson 5: Don’t fall foul of ITT! US tech controls in focus
Sharing intangible technology or software related to a US item that is controlled requires authorisation, just as though it were a physical item – which makes the regulations relating to ITT (‘Intangible Technology Transfer’) one of the most difficult areas of compliance to implement and monitor.
We look at what is controlled and how, and what businesses can do to ensure that technology transfers, in all forms, are protected and controlled. We also explore the situations in which ITT is most likely to occur, the problem of intra-company transfers, business trips and deemed exports, and using The Cloud for storing controlled data.
Lesson 6: Designing an Internal Compliance Programme to US standards
US companies feel most comfortable trading with non-US companies where the latter have established an Internal Compliance Programme or Plan (‘ICP’) which meets US ICP standards – and having such a programme in place is a great way for non-US companies to showcase their understanding and compliance with US export control regulations, thus providing valuable reassurance to US partners. In this session, we explore not only the key elements of an ICP and its design, but also how to make an internal business case for investing the necessary resources to ensure it is fit for purpose and world-beating.
Final Quiz to get certified
The quiz will be made available in the completion of all six lessons.
To get started, e-mail info@customsmanager.org
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