Do I Need an Export License?

Do I Need an Export License?

Posted on October 1, 2021

The vast majority of exports fall under the US Dept of Commerce's Bureau of Industry and Security (BIS) under the distinction of No License Required (NLR). But, awareness is key when exporting. Many people think it is required to have some sort of license to begin exporting, but this is not true. The type of export, destination, and the end-use of the export are the main factors for determining if an export license is required.

Why might one need a license to export? The license is a necessary regulatory check by the US government (and other governments who have their own rules) to understand the types of products leaving the US and how they might be used. The licensing can ensure that harmful goods are not put into the wrong hands or misused and should be considered as a protective measure.  Specific countries or buyers can be scrutinized, and in some cases, products cannot be legally exported to a particular buyers, no matter the export type.

Who, what, where, and how are essential questions to determine if an export license is needed. Each question will help to decide if further research or government regulations apply.

What are you exporting?

The Department of Commerce uses the Export Control Classification Number (ECCN) to describe an export. Finding your ECCN on the  Commerce Control List (CCL) is a good first step to understanding if a license is needed. Identifying the export in the CCL will indicate any controls or restrictions on the product and identify where to look for the next step of identification.

If your export falls under the Dept of Commerce's purview and is not listed on the CCL, the export is considered an EAR99. An EAR99 distinction is typically a consumer good with low technology, the uses of which do not likely have a military use or cause harm. 

If a control number is present, it will be used along with the "commerce country chart" in the same box.

Where is the export going?

Governmental restrictions on a variety of countries exist but in varying degrees and for different exports. Embargoed counties are the most recognizable and have been designated as supporting terrorism.

Using Commerce's Country Chart will indicate if the export is allowed into that country without an export license. Scroll to find the country, and use the control number(s) from the CCL to find the correlating box. If the correlating box has an "x" in it, an export license is needed.  If there is no "x" under the concern and country box, then no export license is required for that destination.

The next question to ask is who will be receiving the exports and if any sanctions are placed on that country or purchaser.

Who is receiving the item?

Even if export licenses are not required for your export category, there still may be a license or regulation for a particular purchaser or country. Here is where the Office of Foreign Asset Control (OFAC) can come into play. OFAC has a variety of sanctions on specific countries and individuals. The Sanctions Programs and Country Information and the  Specially Designated Nationals and Blocked Person List provide additional detail to determine if you can export to a given country or purchaser.

Now that you know the basics on who, what, and where, we can explore how the export will be used.

How will it be used?

Understanding how the export can be used is also a determining factor of export licensing. If the export can be linked to the creation or use of weaponry or drug trafficking, restrictions often apply. The resources above offer indicators about potential harmful uses. When in doubt, it is best to contact the BIS for advice or an official ruling if a license would be required.

If it is determined that an export license is necessary, apply for the license through the BIS. An online system is available and offers faster service. Be aware that licenses typically expire every two years. No License Required (NLR) is a common indicator on products and is used on export documents if a license is not necessary. 

Although licenses are typically not required for many exporters,  it is good practice to understand why an export license may be necessary. Failure to comply with export licenses and restrictions can have costly consequences. Several software companies specializing in export compliance and regulations may be of use if your company needs a faster solution to export compliance and licensing. To save your company time, money, and future headaches, be sure to use the resources below and confirm your exports comply with export license regulations.

Resources:

Bureau of Industry and Security: Commerce Control List

Bureau of Industry and Security: Licensing

Shipping Solutions: No, You Probably Don't Need an Export License, But...

US Department of Treasury:  Sanctions Programs and Country Information

US Department of Treasury: Specially Designated Nationals And Blocked Persons List (SDN) Human Readable Lists

Bureau of Industry and Security: Frequently Asked Questions to Export Licensing Requirements