The government imposes restrictions on the export of commodities from the United States. These restrictions state that only shippers with an export license can transport certain items overseas.

Meaning of Export License

An export license, a government-issued document, authorizes a specific export transaction.

This includes the export of technology, such as sensors, software, and lasers.

Before granting a license, a relevant licensing authority carefully assesses the transaction's specifics.

Businesses need not require government authorization in the form of export licenses for most US transactions to international buyers.

To perform due diligence in the transaction, exporters are responsible for establishing if their items need a license and investigating the product's intended use.

How to Get an Export License

Specific government agencies issue import/export licenses to transport specific goods into or out of the United States.

95% of exports do not necessitate an export license, although getting one requires cooperation with government agencies.

The two primary export organizations are the Bureau of Industry and Security (BIS) and the Directorate of Defence Trade Controls of the U.S. Department of State.

Regulations are in place to specify whether goods can be sold to overseas customers, which nations goods can be shipped to, and which foreign customers can be served.

Regardless of whether the United States requires one, other nations where it is exported can require their own licenses and permits.

Determining if Exports Require a License

Dual-use items, software, and technologies with both commercial and military or proliferation purposes make up most products requiring export licenses.

These products are controlled by the Export Administration Regulations (EAR).

It also maintains the Export Control List (CCL) and Export Control Classification Number (ECCN).

Financial ITAR governs defense sales sanctions upheld by OFAC and other organizations.

It monitors specialized exports such as chemical agents, vesicant agents, etc. A Destination Control Statement (DSC) must accompany every shipment that has an export license.

A customs broker can guide applicants through the application procedure and assist them in identifying which goods need an export license.

Submitting Application Through BIS

After assessing whether the export products require a license, businesses can secure a license by doing the following:

  • BIS offers online export license applications through SNAP-R.
  • Users must register and accept the terms and conditions to use SNAP-R.
  • A CIN (Company Identification Number) is given to each user while applying on SNAP-R.
  • Users can control their account information after registering for free.
  • The person or organization who completes the registration is given the role of account administrator.
  • By getting the Power of Attorney and access to the CIN, third-party administrators can submit export license applications on behalf of a company.
  • Third-party administrators are required to have their own CIN for the process.

Export License Number

Examining if the object intended to export has a designated Export Control Classification Number (ECCN) is crucial.

It establishes whether an export license from the Department of Commerce is required.

These five-character identifiers categorize dual-use goods on the Commerce Control List (CCL) for export control purposes.

According to the nature of the product i.e the kind of commodity, software, or technology, and its technical specifications, ECCNs classify products.

Difference Between Exporting and Licensing

Exporting involves manufacturing and selling goods to the country of importation.

While licensing refers to permitting a foreign entity (the licensee) to manufacture and sell a company's products for a royalty fee on each unit the foreign entity sells.

EAR99

Export Administration Regulations (EAR99) refer to goods not subject to regulation by another federal agency or included on the Commodity Control List (CCL).

EAR99 products are usually low-technology or simple consumer goods that do not need an export license.

However, certain exceptions exist.

Types of US Export Licenses

In the United States following export licenses are applicable:

1. Individual Validated License:

A permit is used to export goods that the government must closely supervise.

This license is applicable if the product is not listed in EAR99, is being shipped to a nation under embargo, or is being used for a restricted purpose.

This license is used when selling a fixed quantum of products to a single end customer.

2. Encryption License Arrangement:

This license is necessary to export encryption products to specific nations or organizations.

The exporter must apply for this license to the Bureau of Industry and Security (BIS).

They should include information on the intended use, the intended user, and the encryption employed.

It is used for unlimited quantities of commodities.

3. Deemed Exports for Encryption Technology and Source Code:

When a foreign national is granted access to source code or encryption technology in the United States, it is regarded as a "deemed export."

Depending on the technology and the recipient's nationality, a license may be needed for such presumed exports.

4. Technology Licenses

Licenses are required to export specific technologies.

If the technology is being employed for the development of products, the details are to be mentioned in this license.

The BIS must request these licenses.

The exporter must include information regarding the technology or source code being exported and the end user.

5. DSP 5 Export License

ITAR mandates obtaining a Permanent Export License (DSP-5) before permanently exporting unclassified hardware or items on the United States Munitions List.

Diff between ECCN and EAR99

The U.S. government uses two categories to regulate the export of commodities and technology: ECCN (Export Control Classification Number) and EAR99 (Export Administration Regulations 99).

ECCN is a five-character alphanumeric code that identifies the specific category of items subject to U.S. export controls.

They are listed in the Commerce Control List (CCL).

This list is kept up to date by the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce.

ECCN defines the exact license requirements and limits and whether a license is necessary to export the item.

EAR99 describes goods covered by the Export Administration Regulations but not on the CCL.

EAR99 products are typically low-risk and do not need a license for export, except in select situations or to a few nations.

The difference between an ECCN and an EAR99 is that the former is a catch-all classification for things subject to export controls but not listed on the CCL.

The latter is a specific classification that shows the level of control required to export a specific item.

Time Taken to Secure Export License The license application is submitted online through a U.S. government agency site.

The Export Control Officer can monitor the government's approval process. Generally, licenses are issued between 30 to 60 days after application.

Cost of Export License

Typically, there are no charges to obtain an import/export license in the United States. The process of acquiring a trading license varies depending on the agency the business is dealing with.

ITAR and EAR Compliance The terms "ITAR compliance" (International Traffic in Arms Regulations) and "EAR compliance" (Export Administration Regulations) relate to adhering to the rules established by the U.S. Departments of State and Commerce, respectively.

These rules are established to limit exporting products and services from the United States.

EAR compliance pertains to the export of dual-use goods, software, and technology that have both civilian and military applications.

Whereas ITAR compliance is required to export defense goods and services listed on the United States Munitions List (USML).

Obtaining licenses or authorizations, adhering to limits and regulations, and providing accurate and thorough documentation throughout the export process are all requirements of compliance with ITAR and EAR regulations.

There may be severe fines and legal repercussions if these restrictions are broken.

Items That Can’t be Exported From the USA

The law of the United States forbids the trade of several items.

These items include fake goods like handbags, software, movies, and medicines.

Money and financial instruments like bank draughts, credit cards, cash, and traveler's checks are also forbidden.

Illegal drugs like marijuana and specific medical equipment and supplies also feature in the forbidden list.

Other prohibited items include electronics, firearms, weaponry accessories, military and tactical gear, ammunition, and explosives.

Finally, live or dead animals, reptiles, and horticultural and agricultural items are not allowed in shipping.

Countries Banned From US Export

The BIS applies EAR to carry out specific sanctions by the US government levied against Cuba, Iran, North Korea, and Syria.

These measures may be taken unilaterally or in accordance with resolutions of the UN Security Council.

Export Tax The U.S. Constitution prohibits export taxes under Article 1, Section 9.