How ECCN software can ensure your exports remain compliant
If you're exporting goods from the US, it's critical that you familiarize yourself with the various export control rules and other trade restrictions that may prevent you from shipping certain items without a valid license.
While the majority of goods are free from such restrictions, there are a wide range of commodities that require extra care. These include dual-use items such as electronics, chemicals and telecommunications equipment, to name a few.
If you are found to be in breach of licensing regulations or other export controls, the consequences can be severe, and the US government has recently shown it is serious about pursuing violators. For instance, in April 2023, it hit Seagate with a $300 million fine for breaching export controls by shipping hard disk drives to China.
Therefore, firms must take appropriate steps to ensure they are compliant with all relevant laws. But how should you go about this?
What is an Export Control Classification Number?
The key to maintaining export compliance for restricted and controlled items is the Export Control Classification Number, or ECCN. This is a five-digit alphanumeric code issued to every dual-use item that will require a license for export.
ECCNs categorize goods based on the nature of the product, including the type of commodity and its technical details.
The first digit of the ECCN details its top-level category. These are issued as follows:
- 0: Nuclear materials, facilities and equipment (and miscellaneous items)
- 1: Materials, Chemicals, Microorganisms and Toxins
- 2: Materials Processing
- 3: Electronics
- 4: Computers
- 5: Telecommunications (Part 1) and Information Security (Part 2)
- 6: Sensors and Lasers
- 7: Navigation and Avionics
- 8: Marine
- 9: Aerospace and Propulsion
This is followed by a letter identifying the product group. There are five sections within this part of the ECCN. They are:
- A: End Items, Equipment, Accessories, Attachments, Parts, Components and Systems
- B: Test, Inspection and Production Equipment
- C: Materials
- D: Software
- E: Technology
The final three digits of the ECCN specify the individual product. For example, a gas turbine engine has the ECCN 9A001.
How does an ECCN differ from other reporting requirements?
An ECCN should not be confused with other export classification systems used by the US, particularly the Schedule B number or the Harmonized Tariff System Nomenclature. While these will all be needed when trading internationally from the US, they have different purposes.
Schedule B is intended for statistical purposes and is used by the Bureau of Census to collect essential trade information. The Harmonized System, meanwhile, is designed determine the correct import duties for goods. While they may look similar, they report very different things, so must not be mixed up.
Consulting the Commerce Control List
To find the correct ECCN for your product, the first step the US International Trade Administration recommends is to search the Commerce Control List (CCL). This provides a comprehensive overview of products that have license requirements or other export restrictions.
An item's entry on the CCL will spell out the reasons for any controls and what businesses need to do in order to export them legally to a specific market.
Other options for identifying the correct ECCN code include talking to the manufacturer if this is different from the exporter, as they may already have an assigned ECCN.
If a business is unable to determine whether its products are controlled, it can also communicate directly with the US government to ascertain the correct ECCN. A request for an ECCN can be submitted online through the Bureau of Industry and Security (BIS) website using the Simplified Network Application Process - Redesign (SNAP-R) system.
How the right ECCN software keeps you compliant with export control rules
Relying solely on searching the CCL may not be enough, however, which is why it pays to invest in dedicated ECCN software that can streamline the process and ensure you aren't overlooking anything vital.
The US government notes, for instance, that businesses that only take a cursory look at the CCL - searching simply for the most general terms - can easily end up assuming their commodities are unlisted if they do not find them quickly.
By using the right technology, firms can be certain they are not mis-classifying their items. These tools can also greatly streamline the process of searching for and identifying the correct ECCN codes for future use.
If a product is not listed on the CCL and does not have an ECCN, it is classified as EAR99. The majority of non dual-use commercial products will fall under this designation and will not typically require a license to be exported or re-exported.
However, this does not mean that EAR99 items are always exempt from restrictions. For example, if you intend to export an EAR99 item to an embargoed or sanctioned country, to a party of concern, or in support of a prohibited end-use, a license may be required. Therefore, it is important that firms look beyond the CCL list and the ECCN when determining what licensing requirements they need.
Again, effective technology can assist with this by offering a comprehensive, constantly-updated hub that businesses can rely on for every aspect of their international trade. With export control compliance, customs classification and automated filing solutions all in one place, firms can save time and money while also guaranteeing they remain on the right side of import and export requirements.