International Trade Blog

If you import or export, you may be familiar with the terms foreign trade zone and free trade zone, both of which are frequently abbreviated as FTZ. These terms are often used interchangeably to refer to a class of government-run duty-free zones, but they actually mean slightly different things.

Free trade zone is a more general, universal term. Customs authorities representing governments across the globe have established free trade zones. Free trade zones are areas in which commodities can be manufactured, modified or stored under specific customs regulations and generally not subject to customs duties.

According to U.S. Customs and Border Protection (CBP), foreign trade zones are the United States’ version of free trade zones. FTZs are designated areas within the United States that are legally located outside of the customs territory of the United States, meaning that goods that reside within an established FTZ haven’t yet cleared customs.

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You’ve just found a buyer in a foreign country and you’re preparing to close the sale—great! But there’s one thing you should keep in mind that is easy to overlook: the end use and end users.

You will need to determine the end-use (how will the product ultimately be used) and the end-user (who will ultimately use the product). To ensure that you are compliant with the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) of the United States, you must be sure that you are not shipping goods to a prohibited end-user or for a prohibited end-use.

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The Bureau of Industry and Security (BIS), which is part of the U.S. Commerce Department, is responsible for implementing and enforcing the law that "regulates the export, reexport and certain transfers of most commercial items as well as some less-sensitive military items" that are subject to the Export Administration Regulations (EAR).

While there are many other agencies in other departments that regulate certain items, BIS has jurisdiction over most items—commodities, software and technology—created for commercial use.

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There are many reasons the U.S. government has decided some goods should require a second look before they can be exported to certain countries.

In my previous article I explained what these various reasons for control are as they appear in the Commerce Department’s Export Administration Regulations (EAR). And I explained why exporters would need to apply for an export license from the U.S. government based on the particular Reason for Control and the destination country.

Even if one or more reasons might apply to a product going to a specific country, the EAR also provides exceptions to the export license requirement.

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In a previous article I explained the export license determination process for exports of dual-use items controlled by the U.S. Department of Commerce under the Export Administration Regulations (EAR).

We walked through how exporters must first find the correct Export Control Classification Numbers (ECCNs) of their products and then determine if an export license is required based on what reasons for control apply to the export and whether or not any license exceptions are available.

Today’s article gives a summary of each EAR reason for control.

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In a previous blog post, I discussed what I had learned by attending a seminar cosponsored by the Bureau of Industry and Security (BIS) and the Minnesota Trade Office. I described how to find an item’s Export Control Classification Number (ECCN) on the Commerce Control List (CCL).

In today’s blog post, I will describe the next step in the process: How to use the Commerce Country Chart to determine if an export license is required based on the reasons for control.

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Does my product require an export license? That's a question you should ask before every export.

In order to find the answer, you first need to answer two preliminary questions:

• What is the Export Control Classification Number (ECCN) of the product?
• What is the destination country?

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If you have multiple people responsible for various aspects of your company's exports, it's important that everyone is on the same page when it comes to export compliance, procedures and documentation. Unfortunately, I talk with too many people who admit that their company lacks a formal set of export procedures.

Without a formal set of procedures—what many companies call an Export Management and Compliance Program—your company is at an increased risk of shipping delays, problems getting paid, and significant financial penalties for export compliance violations.

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You just bought a car from a U.S. dealership and want to sell it to a foreign buyer in Canada. You’re vaguely aware of a rule stating that exporting used vehicles out of the U.S. requires specific documentation. But this is just something you’re putting up on Craig’s List. And you just bought the car, so of course it’s not used—right?

This is where things get tricky. When it comes to U.S. export regulations, what is considered a used vehicle is broader than you might expect.

According to Customs and Border Protection (CBP), a used vehicle is defined as “any self-propelled vehicle the equitable or legal title to which has been transferred by a manufacturer, distributor, or dealer to an ultimate purchaser.”

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When I talk with exporters, I'm amazed at how many people are using outdated versions of export forms or are unaware of changes to regulations that directly impact their international shipments.

Too many companies rely on the same templates and rules that they were using 10 years ago. It's a recipe for disaster.

Fortunately, there's a better way.

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