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Date: 2016-08-12

Complying with Export Regulations

Just because you sell cross border via your website, WPG, or another marketplace doesn't mean that you can ignore U.S. export rules.  Failure to comply can have serious legal consequences.

Export rules take different forms and can involve restrictions on selling goods to non-U.S. countries, people and organizations. Most countries have such restrictions, but the U.S. and a handful of others have especially complex ones because of the high-level technology they produce.

If you have a good that is restricted you may be able to sell it but it will need a license, usually issued by the  Department of Commerce through its Bureau of Industry and Security. They have a good website, but not all explanations are clear.

Legalistic language reflects the not always successful efforts to balance the needs and speed of business with the growth of external threats to national security.

As mentioned, consumer items that can be purchased in a store near you will most likely not require a license and are designated EAR (Export Administration Regulations) 99. Complexity sets in when seemingly benign commercial items are used in weapons of mass destruction.

Items that may require a license have an Export Control Classification Number (ECCN).  If you are a reseller, an easy way to find the ECCN is ask the manufacturer.  If the manufacturer doesn't know because they don't export, you'll have to find it yourself.

You can do so via the website cited above.  Not only will the site indicate the number, it will also tell you whether a license is needed.  If a license is needed, you can apply online.  If after reviewing the items descriptions and whether a license is required there is still a question about your item, you can submit a determination request to BIS.

Another facet of the controls system is countries under embargo.  Despite warming relations with Cuba, for example, you still cannot sell most things to buyers on the island, with the exception of agriculture, medical and telecommunications products.  A limited number of exceptions exist for other countries under embargo.  For details, visit www.ofac.treasury.gov or call your local Export Assistance Center.

Another restriction involves people and institutions of concern.  The government used to refer to such entities as "denied parties," as in denied from receiving U.S. items of any kind.  Such parties include known terrorists, illegal arms traffickers, research institutions that support bad guys and bad governments, violators of U.S. export control regulations, and assorted miscreants.  All of them are consolidated in one list on the BIS website, which can easily be checked.

There's lots of help available to stay out of trouble and within the law.  Many freight forwarders and logistics companies program their computer systems to flag problematic shipments and nothing moves until discrepancies are resolved.  But ultimately you, the exporter, are responsible.

Prudence dictates that you create an export compliance program for your business.  It should consist of these general steps.

1.  Appoint one person to be your compliance officer

2.  Research the ECCN's for each SKU that you export or intend to export

3.  Determine if any product requires a license or is EAR 99, NLR (no license required)

4.  Check Parties of Concern list

5.  Know the countries under embargo

It would be preferable not to worry about any of this.  But we live in a world where due diligence has its place.  To be in compliance is a good and necessary thing.


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