ECCN and Export Controls: When Your Package Needs a License

Shipping internationally can often be as simple as packing up T-shirts, phone cases, or coffee mugs, completing the necessary customs forms, and sending them off. However, there are certain items that demand more attention, specifically those that require an export license. Shipping these without the proper documentation isn't just a small mistake; it's a serious federal offense. Violations can result in up to 20 years in prison and fines of up to $1 million per violation. The Bureau of Industry and Security (BIS) takes these matters very seriously.

Determining whether an item requires a license can be tricky. For example, a regular laptop can be shipped without issue, but if that laptop has specific encryption capabilities, it might require an export license. Similarly, while a standard GPS unit may not need a license, a high-precision module intended for drones might. Context is key in these situations.

What Is an ECCN?

An Export Control Classification Number (ECCN) is a five-character alphanumeric code that identifies items listed on the Commerce Control List (CCL). This number is crucial for determining if your item has export restrictions and what kind of license you might need.

ECCN Format

The ECCN format is structured as follows: a digit, a letter, and three more digits (e.g., 3A001). Here's what each part signifies:

First Digit (0-9): This represents the category of the item. For example, '3' indicates electronics.

Letter (A-E): This indicates the product group, such as 'A' for equipment, assemblies, and components.

Last Three Digits: These specify the item's control reasons.

For instance, ECCN 5D002 refers to encryption software in the telecommunications and information security category.

The 10 Categories

Items are grouped into ten categories, each addressing a different sector:

Nuclear Materials & Facilities: This includes reactors and depleted uranium.

Special Materials & Related Equipment: Encompasses materials like carbon fiber and certain metals.

Materials Processing: Includes machine tools and CNC equipment.

Electronics: Covers integrated circuits and test equipment.

Computers: Pertains to high-performance computing devices.

Telecommunications & Information Security: Focuses on encryption and network gear.

Sensors & Lasers: Involves cameras, radar, and sonar.

Navigation & Avionics: Includes GPS units and gyros.

Marine: Encompasses submarine technology and underwater gear.

Aerospace & Propulsion: Covers rocket engines and UAV components.

The 5 Product Groups

The product groups are categorized by letters:

• A: Systems, Equipment, and Components
• B: Test, Inspection, and Production Equipment
• C: Materials
• D: Software
• E: Technology

Understanding these categories and product groups is vital for correctly classifying your product and determining export requirements.

EAR99: The "You're Probably Fine" Category

The good news is that most commercial items fall under the category of EAR99. This means the item is subject to the Export Administration Regulations (EAR) but does not have a specific ECCN listed on the Commerce Control List.

Items classified as EAR99 can usually be exported without a license to most countries and end-users. However, there are exceptions to this rule.

EAR99 Exceptions

Even items classified as EAR99 are not entirely free from restrictions. You will still require a license if:

The destination is embargoed. Countries like Cuba, Iran, North Korea, Syria, and the Crimea region have strict embargoes.

The end user is on a restricted list. The Entity List, Denied Persons List, or Specially Designated Nationals List can prohibit certain transactions.

The end use is prohibited. This includes uses related to nuclear, chemical, or biological weapons, or missile development.

How to Classify Your Item

Classifying your item correctly is crucial to ensuring compliance with export regulations.

Step 1: Determine If It's Subject to the EAR

An item is subject to the EAR if it is:

• Made in the United States.
• Contains US-origin components that exceed the de minimis level.
• A "direct product" of US technology.

If none of these apply, the item may not be subject to EAR.

Step 2: Check If It Has an ECCN

There are several methods to determine if your item has an ECCN:

• Self-classification: Review the Commerce Control List yourself. This method is moderately reliable if you are familiar with the technical specifications.
• Manufacturer/supplier inquiry: Ask the manufacturer or supplier for the ECCN. This is highly reliable as they should be knowledgeable about their products.
• BIS SNAP-R request: Submit a classification request to the BIS. This method is definitive but can take 2-4 weeks.
• Consult a trade compliance expert: Hiring a consultant can provide high accuracy, though it may be costly.
• Industry associations: Some associations publish common ECCNs, offering moderate reliability.

Step 3: Check the Country Chart

Once you have the ECCN, consult the Commerce Country Chart to determine if a license is needed for your destination. Each ECCN has "Reason for Control" codes that correspond to columns on the chart. If the chart shows an "X" in the column for your destination country, a license is required.

Common Items That Catch People Off Guard

Certain items might not initially seem like they would require special attention, but they do:

• Night vision goggles and high-end thermal cameras are controlled due to their potential military and surveillance applications.
• Certain drones and advanced GPS modules may require licenses depending on their specifications and accuracy.
• Encryption hardware often falls under specific controls, but many commercial products can be exported under License Exception ENC after submitting a classification report.
• CNC machines and other precision manufacturing equipment may require licenses based on their precision levels.

The Encryption Special Case

Encryption technology is a unique case due to its widespread use and historical attempts at regulation. Most commercial encryption products can be exported under License Exception ENC. However, it is typically necessary to submit a classification report to the BIS before exporting. This requirement is more of a notification than a license application.

Penalties for Getting It Wrong

Understanding and following export control regulations is crucial because the penalties for violations are severe.

Criminal Penalties (Willful Violations)

• Fines: Up to $1,000,000 per violation.
• Prison: Up to 20 years per violation.
• Conspiracy fines: Up to $1,000,000.

Civil Penalties (Administrative)

• Per violation fines: Up to $364,992 (adjusted annually).
• Denial of export privileges: Up to 10 years.
• Seizure and forfeiture of goods: Entire shipment value.

Real cases demonstrate that enforcement is strict, even for seemingly minor violations.

License Exceptions: When You Don't Need a Full License

There are situations where an item with an ECCN might not require a full license due to specific exceptions:

• Technology & Software (Unrestricted) - TSU: Includes publicly available tech/software.
• Encryption (Mass Market) - ENC: Applies to most commercial encryption.
• Limited Value Shipments - LVS: Covers low-value shipments of controlled items.
• Shipments to Group B Countries - GBS: Certain items to allied nations.
• Civil End Users - CIV: Items for civilian use.
• Temporary Exports - TMP: Items sent temporarily.
• Servicing and Replacement - RPL: Replacement parts for previously exported items.
• Governments & International Organizations - GOV: Shipments to certain governments.

Your Compliance Checklist

Before shipping potentially controlled items:

Know your product. Gather technical specifications.

Classify it. Determine if it has an ECCN or is EAR99.

Screen the destination country. Check for embargoes and consult the country chart.

Screen the end user. Use the Consolidated Screening List (CSL) from trade.gov.

Screen the end use. Verify the intended use of the item.

Check for license exceptions. Determine if an exception applies.

Apply for a license if needed. Use the BIS SNAP-R system.

Document everything. Maintain records for 5 years.

Deemed Exports: When the Item Never Leaves the Country

A "deemed export" occurs when controlled technology or source code is released to a foreign national within the United States. This can happen without physically exporting the item, such as when showing technical data to a visiting engineer or hiring a foreign national who gains access to controlled software.

Record Keeping Requirements

The BIS mandates that you keep export records for five years from the date of export, re-export, or transfer. This includes EAR99 shipments and those under license exceptions.

Documents to keep include:

• Commercial invoices
• Shipping documents
• Export licenses
• Classification records
• End-user statements
• Denied party screening results
• Internal compliance correspondence

If audited, failure to produce these records can itself be a violation.

For standard consumer goods like clothing or basic electronics, you are likely dealing with EAR99 items and can ship without extensive compliance concerns. However, if you are in industries like tech, manufacturing, aerospace, or defense, it is crucial to classify your products correctly. The consequences of incorrect classification can far outweigh any potential shipping cost savings.