HOST: What do you need to be aware of when exporting an EAR99 item?
How do you prevent your company or yourself
from being involved in illegal or prohibited shipments?
Are there lists you can screen your customers against?
What types of information
should you pay attention to
that would raise a concern
about your transaction?
These are all questions you may have,
and we have the answers.
Hello, my name is Clariebel,
and I work for the Bureau of Industry and Security
at the U.S. Department of Commerce.
The following clip is an example
of the type of call our agency often receives from exporters
regarding screening of transactions for exports of EAR99 items.
EAR99 is a basket category
designated to cover most commercial items
that are exported out of the United States.
If your item is not described in an Export Control Classification Number
on the Commerce Control List,
then it is designated as EAR99.
I hope that it will explain the importance
of screening your transaction when exporting commercial products.
Let's get started.
[telephone rings]
COUNSELOR: Hello. Exporter Counseling, this is Douglas speaking.
How may I assist you?
CALLER: Hi. I think I spoke to you earlier.
I am exporting parts for a printing press to England,
and my forwarder asked me about the Export Control Classification Number,
or ECCN, for my product.
COUNSELOR: Yes, I think I remember.
You were going to give us a call back
after you had reviewed the Commerce Control List
to try to find your ECCN for the item, correct?
CALLER: Yes, that's right.
After we spoke, I went to the BIS website,
www.bis.doc.gov,
and didn't find my items listed anywhere on the Commerce Control List,
so I determined that my items are EAR99.
But I still have a few questions.
COUNSELOR: Well, I'm happy to help you with those.
What questions do you have?
CALLER: I was thinking--
since the items are not on the Commerce Control List,
and therefore are designated EAR99,
do I just go ahead and ship?
COUNSELOR: Well, not quite.
Although you're right, items designated as EAR99
are not listed under any ECCN on the Commerce Control List,
they are still subject to the Export Administration Regulations,
or EAR, and you do need to be aware
that in some circumstances a license may be required
even for an EAR99 item.
CALLER: Really?
I thought that EAR99 meant that there weren't any restrictions
and that I could ship using the designation No License Required, or NLR,
in the Automated Export Record System.
COUNSELOR: Well, you're halfway there.
In general, items that are designated as EAR99
can be exported to almost all destinations without a license
under the designation NLR, or "No License Required."
But if your proposed export is to an end-user of concern,
in support of a prohibited end-use,
or to an embargoed country or sanctioned country,
you may be required to obtain a license
and in some cases not to be authorized to export at all.
CALLER: I think you did mention that when we first spoke.
COUNSELOR: Yes, it's important to keep in mind
that a license requirement may be triggered
for a transaction that does not normally require a license,
and that would be based on the end-use or end-user.
CALLER: I know who my customer is, and they're in the printing business.
What should I look for?
COUNSELOR: Well, the EAR contains end-user and end-use controls
that are related to nuclear, missile technology,
and chemical and biological weapons
in countries of concern, or, in some cases, worldwide.
These regulations, they ensure
that transactions that raise proliferation concerns
are reviewed by BIS, Bureau of Industry and Security, first.
On our homepage, you can select "Export Administration Regulations,"
and when you click on that link, you'll be able to read to Part 744
and get more information on end-user and end-use controls.
CALLER: I can see why we would want to be sure
that U.S. products aren't going to those types of activities!
COUNSELOR: Yes, in fact, BIS may also inform the exporter
that a license is required
when there is an unacceptable risk
of use in or diversion to any of the specified activities.
One way we inform the public
about the proliferation and end-user concerns
is through the Entity List.
It includes entities whose activities impose a risk
of diverting items to programs related to weapons of mass destruction.
It also includes certain entities
sanctioned by the U.S. Department of State.
CALLER: Where do I find this list?
COUNSELOR: Are you still on our website?
CALLER: Yes, let me go back to the homepage.
COUNSELOR: That's always a good place to start.
The link is located right there.
On the left hand side of our homepage,
under the red box that says "Exporter Resources,"
you'll see a link that says "Lists to Check."
If you click on that link,
you will find the Entity List which we just discussed.
CALLER: I see, but what about these other lists on the page?
COUNSELOR: Yes, as you point out, there are several lists:
the Denied Persons List, the Unverified List,
the Entity List, they are supplied by BIS.
You will also see links to the Specially Designated Nationals List
supplied by the Treasury Department;
and the Debarred List and Nonproliferation Sanctions List.
Those are supplied by the State Department.
CALLER: I don't want to get into trouble here.
So what does it mean if my customer is on one of these lists
Does it mean I can't export to them?
COUNSELOR: Not necessarily.
For example, if a party to a transaction is on the Entity List,
you may need to apply for a license.
The Denied Persons List is a list of parties
that have been denied export privileges
because they violated the EAR, Export Administration Regulations.
Dealing with one of these parties would be a violation of a denial order.
CALLER: What about the Unverified List?
COUNSELOR: The Unverified List actually serves as a red flag.
It's there to alert exporters
that BIS could not verify an end-user in other transactions.
A red flag itself does not create an automatic license requirement.
CALLER: Hey, I was in a band called the Red Flags
when I was in school.
I have a feeling that those aren't the red flags that you're talking about!
COUNSELOR: You're right about that.
Red flags refer to abnormal circumstances
indicating that the export may be destined
for an inappropriate end-use, end-user, or destination.
For example, an order for items
that are inconsistent with the needs of the purchaser,
such as a restaurant wholesaler ordering a machine tool,
or a new customer declining installation and testing
when those are included in the sales price.
CALLER: So what do I do if I think there's a red flag?
COUNSELOR: Well, when red flags are raised,
you have a duty to check out the suspicious circumstances
and inquire further.
The purpose of this inquiry and reevaluation
is to determine whether the red flags
can be explained or justified
so as to evidence the bona fides of the party
and the legitimacy of the transaction.
If they can, you may proceed with the transaction.
BIS provides "Red Flags" and "Know Your Customer" guidance
to help exporters recognize suspicious transactions.
You can find these on the Enforcement section of our website.
CALLER: I'll be sure to check that out.
COUNSELOR: In fact, BIS recommends
that businesses adopt export compliance measures
to make it easier to comply with the regulations.
Take a look at the link on our homepage
called "Compliance Program Assistance."
We've also created an Online Training Room
with training modules and archived webinars.
Select "Seminars and Training" on our homepage.
CALLER: So let me go back over this
to make sure I understand what we covered.
When I export an item that's an EAR99 item,
I want to consider whether the country I'm shipping to
is sanctioned or embargoed,
whether the customer is going to use the item
for a bad end-use like nuclear proliferation
and whether my customer is one of those prohibited parties
like the Denied Persons List or the Entity List.
If nothing comes up
and there's nothing out of the ordinary that raises concern,
red flag, as you like to say, then I ship NLR?
COUNSELOR: You've got it.
CALLER: Thanks so much.
I can see that I have obligations even for an EAR99 item--
it's not a free pass to exporting!
It is the least I can do
to protect U.S. national security and foreign policy interests
and prevent my company from committing export control violations.
COUNSELOR: Yes, always exercise your due diligence
and determine what actions you need to take, if any.
If in doubt, you can always give us a call.
HOST: We hope we have answered some of your questions
regarding screening your transaction
when exporting items that do not normally require an export license.
You should consider whether the country you are shipping to
is sanctioned or embargoed,
whether your customer is going to use the item
for a bad end-use like nuclear proliferation
and whether your customer is on
one of those prohibited parties lists
like the Denied Persons List
or Entity List.
You should be aware of possible red flags in your transaction
and be familiar with the Know Your Customer guidance
that BIS provides
to avoid dealing with unauthorized parties or transactions.
Thank you and have a great day.