Export Compliance Program Third Element: Export Authorization

July 13, 2021

(The Exporting Source) by Blake Gill *

Hello again! Last time we discussed how important a risk assessment is when building an Export Compliance Program (ECP). The results for the assessment will be a determining factor in the steps your organization must take to gain authorization for an export. If your organization has many items that are controlled by the Commerce Control List (CCL), then the Export Authorization section of your ECP may be the largest section. Even if your organization does not have an extensive list of controlled items, this section will still be one of the most important to ensuring your company operates in a compliant manner.

The goal of the Export Authorization element is to build procedures, processes, flows and decision guides to help employees make correct and consistent decisions. The decisions will help determine jurisdiction, classification, license determination and screening. With each of these parts you will look to answer a few main questions: What agency has jurisdiction over your item? What is the correct classification of the item? How does the organization determine if a license is needed?

For determining jurisdiction, one will look at the capability of the items and the end use. If an item is developed for a military end use it will likely be controlled by State’s International Traffic in Arms Regulations ( ITAR). If an item is low-level technology and mainly used in commercial applications, it is likely controlled by Commerce’s Export Administration Regulations (EAR). Since each set of regulations has independent classification procedures, determining the jurisdiction is always the first step to getting a classification. Remember to never make any assumption of an item without doing a proper jurisdiction determination so that you get an accurate classification. If your team is unsure of the jurisdiction, the help of a consultant or attorney may be beneficial. As a last resort effort, a jurisdiction determination request can be submitted to the government for review and a legally binding determination.

Once the jurisdiction has been determined, the proper classification can be determined using item-specific technical specifications. Collaboration between the compliance team and the departments that are responsible for having a deep understanding of the technical specifications will be critical to determining the correct classification using the descriptions within the regulations. If your team is not able to confidently classify an item, the assistance of a consultant or attorney can be used to help with the determination. If the team is not able to self-classify the product, a request for a formal classification from Commerce’s Bureau of Industry and Security (BIS) can be made.

With the proper classification, the team can determine if a license is required. The classification from the CCL, in conjunction with the EAR country chart, will dictate if a license is required for the transaction or if an exemption is allowed.

Lastly, appropriate screening of all parties involved in the transaction must happen to ensure no parties involved are on any U.S. proscribed parties lists prior to export. This screening must occur with every transaction that occurs within the organization regardless of if a license is needed or the jurisdiction. There are several considerations for your organization on screening, such as when to complete screening, if the organization should implement software to screen or manually screen, how often to screen customers, and auditing the screening function.

The element of determining export authorization is an intensive process that requires many different inputs from different functions in an organization. This results in many potential failure points, and a failure within this element can have devastating impacts for the organization. The utilization of external resources, such as consultants or attorneys, in this element is often in a company’s best interest to maintain profitable business activities.

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* Blake Gill is an experienced International Trade Compliance professional with a demonstrated history of work in the technology industry. He has many years of experience working with export control, customer screening and item classification over a wide variety of products. Additionally, Blake has performed the duties of Empowered Official at multiple international companies.