Complying with export control regulations is essential for any exporter. But while the status of some items - such as those that have obvious military applications - will be clear, many other products may also have export restrictions or license requirements placed on them. In many cases, whether or not there are special measures that must be followed is not always clear-cut.
This issue most commonly arises with items that are classified as 'dual-use'. Such products often have export controls or other restrictions placed on them, with the potential for heavy penalties should these not be followed.
However, it's not always apparent which goods may fall into this category. What's more, regulations are changing all the time.
This is why it's vital to have both accurate customs classification solutions and access to up-to-date information in order to stay on the right side of the law when shipping items internationally.
What does dual use mean?
Dual-use classification is given to goods that may have potential military or intelligence applications in addition to civilian purposes. This can cover a wide range of items including technology, chemicals, nuclear materials, toxins and communications equipment.
There are ten internationally-recognized categories for dual use items. These are:
Category 0: Nuclear materials, facilities and equipment
Category 1: Special materials, chemicals, micro-organisms and toxins
Category 2: Materials processing
Category 3: Electronics
Category 4: Computers
Category 5: Telecommunications (Part 1) and information security (Part 2)
Category 6: Sensors and lasers
Category 7: Navigation and avionics
Category 8: Marine
Category 9: Aerospace and propulsion
Beyond this, each category is also divided into five subsections that describe the type of product. These are:
A: Systems, equipment and components
B: Test, inspection and production equipment
C: Materials
D: Software
E: Technology
The challenges posed by dual-use goods
Typically, firms dealing with dual-use items will be required to have an appropriate license for any exports. Therefore, they must first determine what processes they need to follow and make a complete, accurate application before exporting any goods.
Failing to correctly categorize items and understand whether or not they are subject to export controls can mean that firms inadvertently end up doing business with regimes or organizations that are subject to trade embargoes or other sanctions.
This is challenging as the categorization process can be highly complex. For example, a computer server that could be used as part of a piece of military communications equipment would typically fall under category 5, section A. However, other servers that use similar technology may be designated under different categories depending on their intended purpose.
In other words, there are few hard and fast rules, with items needing to be considered on a case-by-case basis.
How can firms maintain compliance with dual-use regulations?
Effective customs classification software is a must-have for any business handling goods that may potentially fall under dual-use regulations. MIC-CUST's Central Classification System (MIC CCS), for example, includes numerous modules designed to make this as efficient and accurate as possible.
This includes export control classification tools, license management solutions, denied party screening software and more to ensure firms are correctly classifying their goods and following all required procedures to remain in compliance and guarantee successful shipping.