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.
* 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.
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