What key export management steps must US traders be aware of?

Any business exporting goods from the US will be required to follow a range of steps in order to remain in compliance with their legal responsibilities. This includes ensuring goods are classified correctly, meet any licensing or export restriction rules and that traders are fully aware of who they are doing business with overseas.

These can be complex processes, so it’s essential firms fully familiarize themselves with what is needed and invest in the right tools to streamline essential activities. A comprehensive export management software solution will be hugely valuable in this as it can help ensure all necessary declarations are completed accurately and on time, as well as provide full visibility into operations from start to finish.

So what must US exporters know in order to be successful?

Ensuring correct classification

A key step is making sure all items are assigned the correct classification before leaving the country. This is essential for several reasons, including ensuring the government can keep accurate records of exports, but also in order to guarantee compliance with any export control rules. Classification is essential in determining whether goods need a specific license in order to be legally exported.

There are several classification requirements to be aware of. Firstly, there is the Schedule B number, which is used by the Bureau of Census to compile trade statistics and is applied to every product. However, there is also the five-digit Export Control Classification Number (ECCN), which is used to identify dual-use items for export control purposes.

Getting these classifications correct is critical. Mistakes can lead to unintentional breaches of export rules or sanctions, and this can be very costly. For instance, in 2023, the Bureau of Industry and Security (BIS) fined Seagate $300 million after it continued to ship items that were subject to Export Administration Regulations (EAR) to China.

Understanding export control rules

Once firms know the classification of their items, the next step is to compare them to lists of items that are subject to additional export controls. This typically includes 'dual-use' items that have both commercial and military applications, but may also include hazardous materials that may also require a license.

Items that have an ECCN will need extra care to ensure firms are meeting their legal requirements, both in terms of what they are permitted to export and which destinations and buyers they can send to. Having all the necessary information available in a single location will therefore be critical.

If firms are unsure about whether their items are subject to EAR, they can return to the BIS for guidance about which, if any, export license requirements may apply. The right export management tools can also help businesses identify whether or not the goods they intend to ship will be subject to export restrictions or controls.

Restricted party screening compliance

Another key area to consider is sale to restricted parties. This can include private individuals, businesses and government entities and officials that are subject to sanctions by the US. Having a full understanding of who firms are doing business with is an essential part of Know Your Customer best practices and, as is the case with restricted items, the penalties for noncompliance can be high.

However, this can often be a challenge for businesses, as there are multiple lists of parties that are subject to export restrictions. The Department of Commerce, Department of State and Department of the Treasury all maintain their own lists of individuals who may be subject to various levels of sanction or restriction. For example, while firms may be prohibited entirely from doing business with an individual on a denied persons list, other entities may only have restrictions on certain categories of goods.

While firms can check their business partners against the US' Consolidated Screening List (CSL), this is constantly being updated to reflect new and expiring sanctions, so can be difficult to keep track of. Therefore, taking advantage of export management tools that can automate restricted and denied party screening activities and create a clear audit trail to demonstrate compliance will be vital in providing US exporters with the security and peace of mind they need to operate successfully.

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