8.2 Management & ComplianceManagement and Compliance
Export Compliance Management for eCommerce Transactions
Management and Compliance
- To ensure compliance with the EAR and to manage export-related decisions and transactions, you can establish an Export Management and Compliance Program (EMCP).
- An EMCP lets you analyze pieces of information and individual decisions, and then build them into an organized, integrated system.
- The BIS website has information on the nine core elements of an effective EMCP. In particular, note the EAR’s mandate for sufficient record keeping.
If you have a catalog of dozens or hundreds of items that you want to sell globally, you should consider creating a written compliance plan. In addition to studying the online BIS videos and publications, the person responsible for managing your company’s plan should consider attending specific EAR and export-control seminars. Visit the BIS website, or ask your local U.S. Commercial Service office for information about where to find training. You can also contact BIS for guidance on developing the plan and to review the final document.
StrategyAn item subject to the EAR either will have a specific ECCN or will be designated EAR99. When adding a product to your inventory or reviewing your current product line, ask your suppliers whether they can provide the necessary classification information, create a field in your inventory-management system for classification information, and add a related field that lists the countries to which export of that product is prohibited by the EAR or subject to licensing requirements. If you are obtaining classification information from your suppliers, work closely with them to understand how they determine the ECCN. Remember that, as the exporter, you ultimately are responsible for obtaining any necessary licenses.
Export classification and any license numbers you receive must appear on export documentation, such as the commercial invoice and the Automated Export System (AES) filing; the numbers should be easily accessible in your inventory-management system. For certain types of exports listed in Section 758.1 of the EAR, BIS requires the filing of electronic export information in AES, regardless of value or destination. When completing forms (on paper or online), the U.S. Postal Service and major freight carriers may require you to enter “NLR” (No License Required) for certain EAR shipments.
It’s a good idea to establish a company-wide rule that emphasizes the importance of classification under the EAR and the associated HS numbers. That way, if the inventory-management system doesn’t list an ECCN or EAR99 designation, your company knows the item is ineligible for international shipping. If possible, adapt your inventory-management software so it flags problematic orders. You need to be especially careful with items that are subject to the EAR, whether the items have ECCNs or are EAR99—you don’t want to violate the EAR inadvertently.
International Traffic in Arms RegulationsThe International Traffic in Arms Regulations (ITAR) control the sale of defense items and defense services. These items and services provide the United States with critical military or intelligence capabilities. If you produce or sell these items, you need to learn about the ITAR, including potential requirements to register with the U.S. Department of State’s Directorate of Defense Trade Controls (DDTC).
Start by finding out whether your item for export (hardware, technical data, or defense service) is on the U.S. Munitions List (USML) found in Part 121 of the ITAR. If it is, then explore the ITAR website for complete information on ITAR licensing.
Exporting controlled items that are listed on the USML without first obtaining proper licensing has very serious legal consequences.
Persons Subject to Trade RestrictionsBoth the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) and BIS administer and enforce economic and trade sanctions against certain foreign countries, companies, and individuals, on the basis of U.S. foreign policy and national security goals. OFAC and BIS maintain lists of persons (natural persons and entities, including corporations) that are subject to trade restrictions, including restrictions on the export of items that fall within their jurisdictions. Both agencies also maintain trade restrictions on certain countries, including countries that are subject to trade embargoes.
Every exporter must be aware of the individuals and organizations on the lists of parties of concern. You can find the consolidated screening lists from BIS, OFAC, and the U.S. Department of State. You may also explore adding the Consolidated Screening List API to your website.
If you need help performing these obligations, you can hire a third-party company to conduct these checks for you in real time. You can also purchase software to help you remain in compliance. Freight forwarders also may flag problematic transactions. Please be aware that, as the exporter, you bear primary responsibility for compliance with export controls, and you are responsible for obtaining any required licenses.
Anti-diversion ClauseTo help ensure that U.S. exports go only to legally authorized destinations, BIS generally requires a destination control statement (DCS) on shipping documents. The DCS must be entered for items subject to the EAR, except for items designated EAR99 and those that are eligible for certain license exceptions. The commercial invoice and bill of lading (or air waybill) for nearly all commercial shipments leaving the United States must display a statement notifying the carrier and all foreign parties (the ultimate and intermediate consignees and purchaser) that the U.S. material has been exported pursuant to the EAR and may not be diverted. The minimum anti-diversion statement for goods exported under U.S. Department of Commerce authority says,“These commodities, technology, or software were exported from the United States in accordance with the Export Administration Regulations. Diversion contrary to U.S. law is prohibited.”
Exceptions to the use of the destination control statement are listed in Part 758.6 of the EAR. Advice on the appropriate statement to use can be provided by the U.S. Department of Commerce, an attorney, or the freight forwarder.
Import Regulations of Foreign GovernmentsImport documentation requirements and other regulations imposed by foreign governments vary from country to country. As an exporter, you must be aware of the regulations that apply to your own operations and transactions. For instance, some governments, especially those in the Middle East region, require consular invoices. Other countries may require certificates of inspection, health certification, and various other documents. If required documents are missing or inaccurate, the shipment may be delayed until the paperwork is in order. Shipping companies are very good at helping you through the customs clearance process, but it’s wise to know what is required. There’s a Country Commercial Guide (CCG) for almost every country in the world. Each country guide has a section on import regulations. There you’ll find information on required documents and anything else that’s needed or out of the ordinary. The large eCommerce marketplaces also have good information, but unless you have them or some other third party do the packing and shipping for you, the responsibility for getting things right is yours.
eCommerce Industry Business Registration eCommerce Risk Management Export Controls Export Licenses Customs