Export Controls: An Introduction
January 23, 2018 9:27 PM
In the U.S., many items are controlled, meaning the national government has an interest in where they go, to whom and for what purpose. Just because they are controlled does not mean that an export license is required. Controlled items are assigned an export control number. You can visit this website, https://www.bis.doc.gov/index.php/licensing/commerce-control-list-classification enter information about your product and search for the control number. Generally, products used in making chemical or nuclear weapons require special permission from the government before they can be exported, and there may be other restrictions as well, such as avionics used in weapons systems. But avionics can be used in non-military products too, so the “who” question becomes important.
Once you have your export control number, you need to put it on your electronic export declaration, an online U.S. government filing system for exports valued more than $2500. Nothing has to be filed if less than that amount. The export control number also goes on your commercial invoice.
If you are selling military hardware to a foreign government, you may need approval from the Department of State. It’s unlikely you will be looking for buyers for such items on WPG, but we need to point out the division of labor between exports controlled by the State Department and those controlled by the Department of Commerce.
Before completing a sale to a foreign buyer, you should check the consolidated “parties of concern” list at http://apps.export.gov/csl-search#/csl-search. The list is an online database that consolidates lists from all branches of government that keep track of people and institutions that Americans are prohibited from doing business with or that require a license, or that wave a “red flag” that requires extra due diligence on the part of the exporter. Many countries have such lists and if readers are reading this blog in Ireland, Canada, Mexico or some other country, you should check the regulations and procedures in the country where your business is legally based.
One of the biggest risks is not that the immediate buyer is going to do something prohibited by U.S. export law, but they will divert or sell the product to someone that is prohibited or will use the product for a prohibitive purpose. Because this happens often enough, the government requires you to put on your proforma invoice and commercial invoice a statement requiring that the buyer abides by U.S. export laws including not selling the product to a third party in, for example, a prohibited country such as North Korea.
It’s your responsibility as the seller to ask the buyers where the product will end up. If a violation occurs despite your reasonable efforts, penalties can be avoided by having a complete paper trail of shipping documents and correspondence with the buyer, preferably where you’ve informed the buyer about potential penalties if they violate the law.
If you make or will make multiple cross-border sales, you should have a compliance process with a checklist to make sure you, or whoever will manage the process at your company do it that same way every time.
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