Export Administration Regulations
|This article does not cite any references or sources. (February 2014)|
An Export Control Classification Number (ECCN) is an alphanumeric code assigned to articles, technology and software (collectively, "items") exported from member states of the Wassenaar Arrangement which identifies the level of export control for that item. The ECCN classification that applies to any specific item is determined by referring to a table that is issued for the United States by the Bureau of Industry and Security and for the European Union by Council Regulation (EC) 388/2012.
The ECCN table contains hundreds of ECCN codes that are organized according to the technical parameters and/or end use of the hardware, software or technology that is being exported.
In the U.S., the Bureau of Industry and Security, a component of the United States Department of Commerce allows private industry to self-classify exported items with the exception of certain items containing encryption functionality. In the case of encryption hardware/software, the U.S. company would need to request a product classification ruling from the Bureau of Industry and Security. Although many different U.S. and foreign entities may be involved in manufacturing and distributing an item, ultimately it is the exporter or U.S. Principal Party in Interest (USPPI) that is held responsible for the correct classification of any export and is required to ensure that all applicable export control requirements are met prior to making the export. In the event an ECCN cannot be determined by the USPPI, technical information about the article can be submitted to the Bureau of Industry and Security and the ECCN will be determined and a ruling made.
Each ECCN provides for varying degrees of export control based on the country of end use. The licensing requirement for an ECCN entry may be determined by referring to the Commerce Country Chart in Supplement No. 1 to Part 738 of the Export Administration Regulations. Additionally, some ECCNs have license exceptions associated with the export restrictions—based on Low Value Shipment (LVS) or other mitigating factors. There are also restrictions that apply to certain denied parties, regardless of what would otherwise be an allowed export transaction.
An ECCN identifies the type of control(s) for the items categorized under that ECCN. For example, an ECCN may be controlled for anti-terrorism. After obtaining the ECCN, the exporter must review the Commerce Country Chart to determine whether an export license is required to export items to that country. In other words, if the ECCN is controlled for AT reasons to the country one is exporting to, an export license is required unless license exceptions apply.
Although determining an item’s ECCN can be time consuming and difficult, it is a necessary step in the process of complying with current export control laws. A would-be exporter can submit a request for an official classification via the U.S. Commerce Department's Web site.
Munitions list articles and technologies fall under the jurisdiction of the Department of State and are controlled under International Traffic in Arms Regulations (ITAR). Jurisdiction for all articles and technologies must be properly determined prior to classifications being made to ensure that munitions list articles are not incorrectly classified as dual-use articles or technologies. Jurisdiction rulings can be obtained from the Directorate of Defense Trade Controls (DDTC) of the Department of State.
U.S. export laws are valid also for re-export of U.S. products from any country, according to stipulations in the documentation from the Bureau of Industry and Security. Normally the assigned U.S. ECCN code is valid also for re-export of U.S. origin products from most countries in the world. However, If the product is exported from the US under certain license exceptions, i.e. NLR or LVS, the Wassenaar Arrangement do not have corresponding license exceptions. A product which can be exported from the US without an export license might well need one when re-exporting from an EU/Wassenaar country.
Also, a product exported from the U.S. under mass-market exemption being embedded into other equipment/software loses that status and it is required that product to be reclassified and exported under a separate export license.
Challenges in classification for companies
- Variety of products—Companies who do import and export meet challenges of how to classify products with the growing varieties of products. Classification and restrictions, to some extent, has a bad effect on free trading and growing of business.
- Risk of loss caused by difference in classification—Firstly, the proper classification of your item is essential to determine any licensing requirements under the Export Administration Regulations (EAR). And subsequently exporters and importers need to be aware of how to classify the products accordingly and which category should be classified to. And finally they may be required to obtain a license. A slight difference in classification can mean a huge difference in the duties that are paid.
So a proper classification can save huge amount of money for the company which is why nowadays importers and exporters are dying to find a perfect way to solve those problems above.
- Export Control Classification Number - US Department of Commerce
- Lists of Parties of Concern - US Department of Commerce
- Official Journal of the European Union - Council Regulation (EC) No 428/2009 of 5 May 2009 setting up a Community regime for the control of exports, transfer, brokering and transit of dual-use items