International Trade Blog

One of the more frustrating parts of this job is seeing the costly mistakes small and midsize exporters make when it comes to export compliance.

Because they aren’t “one of the big guys,” some U.S. companies think export compliance regulations don't apply to them (or that they won’t get caught if they don’t follow the regs). Instead, they ignore the regulations, or they breeze through their company’s compliance process and neglect to cross all the T’s and dot all the I’s.

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The phone calls started coming in last week: "I've got a shipment going out tomorrow, but I can't run a restricted party screening because the Consolidated List is offline due to the government shutdown. What should I do?"

Kudos to these exporters for knowing and understanding their export compliance responsibilities. Among those responsibilities is a restriction on doing business with entities the government deems a danger to U.S. interests.

Failure to comply is a violation of U.S. law and can result in civil or criminal prosecution, as well as denial of exporting privileges. I doubt very strongly that a government shutdown will be an acceptable excuse for violating the law.

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One of my favorite aspects of working with our customers is getting their feedback about the export processes and systems they use and love. However, there are some instances when I hear things that make me cringe.

This is especially true when I’m talking to people about export compliance. I ask them what they’re currently doing to stay compliant with export regulations.

Too often I hear: “We don’t have to worry about compliance because our items are EAR99.”

Facepalm.

What I then emphasize (often to deaf ears) is that EAR99 is not a pass to get out of the compliance due diligence process. In fact, determining the proper classification for your goods is only part of the compliance process—end use and end user make a difference!

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It's illegal to export to someone who appears on any of the government's denied party lists, also known as restricted party lists. And it's not just your customers. It's illegal to include any denied parties in any part of your transactions.

The best way to avoid doing this—and the only way to know for sure—is to run screenings for every single export that check all the parties against each denied party list.

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Product classification codes, which are used by the Census Bureau through the Automated Export System (AES) for trade statistic purposes and are also used at the country of import for assessing duties and taxes, are required for most exports.

For some exporters, getting started with product classification can be difficult. “I need a Schedule B number. How do I find the right number?” “Should I just start Googling?” “Is there recommended place to start?” are all questions we’ve been asked, and today, we’ll address them.

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We live in a scary world. We have to protect our country, particularly when it comes to exporting defense-related products including weaponry and military equipment (and components, parts, accessories, etc.) to other countries.

By regulating the export of these products, the U.S. State Department’s Directorate of Defense Trade Controls (DDTC) helps protect U.S. national security so this sensitive information and technology does not get into the wrong hands. Details are found primarily within the International Traffic in Arms Regulations (ITAR).

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Export compliance isn’t one big thing—it’s a million little things. That’s why it’s important to make sure you have a solid understanding of the the components; if you miss one, you could set off a chain reaction.

While this list is by no means exhaustive, by making sure you thoroughly understand these 10 terms, you can save yourself a lot of trouble (and potentially, a lot of money).

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Whenever you work on an export transaction, there are dozens of steps you must follow to successfully complete the process. One of these steps is issuing a commercial invoice. That is true whether your firm sells hundreds, thousands or millions of dollars worth of merchandise.

Occasionally, you may have a customer who requests that you ignore export compliance regulations and alter the invoice value to allow them to save money on import duties.

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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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Are you ready and waiting for your next export compliance audit?

“Now, that’s a dumb question,” you might be thinking. “No one wants—much less eagerly awaits—the imposing entry of Office of Export Enforcement officials into their offices.”

And of course, you’re right! While you certainly don’t look forward to an export compliance audit, it’s absolutely something you should prepare for.

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