Export compliance is one of those topics that can create major challenges for businesses already trading abroad or looking to do so.
One of the most important aspects that falls under this remit is export control. That's because, although most products will not require government checks before they can legally be sent out, some do - and it is this we will focus on for the purposes of this feature.
What is export control?
Export control regulations are laws that prohibit the unlicensed export of particular commodities for reasons of national security or trade protection.
Countries worldwide have some form of export control policy, legislation and enforcement mechanisms and they exist for a number of reasons, depending on the nature of the proposed export and its destination.
For example, some products may violate foreign policy and international treaty commitments, while others may cause concerns about being used in the development of weapons of mass destruction.
One of the most famous pieces of export control legislation was the US's Export Control Act of 1940, which restricted shipments of material to pre-war Japan for fear it would use them to arm itself for conflict.
Simply put, whether or not you need an export licence for the goods you are shipping may depend on:
- The goods themselves (commodity controls)
- Their destination (it may be on a prohibited destinations list)
- Their recipient (the individual or business may be on a Denied Party list)
- Their end use (original goods may be used in an ulterior way or shipped to a Denied Party once reaching their destination).
Don't forget that some apparently innocuous items may be used for military purposes or to harm human beings or animals.
How to find out if you need a licence
Before you begin selling goods to another country, it is essential to check its export laws. You must know what the law is in the nation you're shipping from too, as well as whether or not you will face restrictions. Your recipient must be reputable and you may also need to check what countries the goods may pass through on the way to their destination.
To find out what goods are subject to export controls, you can look up Control Lists online. For example, Japan has its METI list and India has the SCOMET - each nation is likely to be different.
You can then determine what classification your products will need and if you will require a licence before beginning to apply for one.
In order to get a licence, End-User Statements (EUS) or an End-User Undertaking certificate will be required from the destination to declare what use the goods will eventually have.
Exporters must typically now make applications electronically via the relevant country's central online licensing system, including all relevant documentation and technical specifications.
Your responsibility
As an exporter, it is your responsibility to ensure you have the best possible export control management in place and that you are keeping accurate records.
If you are found not to be complying with laws and regulations, you could face penalties including fines, de-registration of licences and even a prison sentence.
How MIC can help
We understand it can be difficult to stay on top of all the rules and regulations concerning trade, particularly since they are complex and ever-changing.
An estimate by NI Business Info suggested up to half of export licence applications have to be returned due to complete or inaccurate applications, so if this is extrapolated, it is clearly a big problem worldwide.
However, don't struggle in vain or risk gambling with the law - take a look at our Export Control Management (MIC ECM) software solution instead. This allows for the central management of all company transactions under export control law, including screening and checking documentation.
You can find out more about it by clicking the link above, or you can contact us for further information on how the product could help your particular business stay on top of export control management.
We look forward to hearing from you!
