The answers can be found in the readings, and the links in the attached files. I want you to take your time and utilize the resources available to you for this these questions. Answer in complete sent
Export License Coverage
The goal is to provide you with a step-by-step approach to determining whether a particular contemplated export is subject to control(s) by the U.S. government (e.g., is not allowed for various reasons, requires an export license or other USG agency permit, is authorized under a license exception, and/or requires some form of reporting other than, or in addition to, a Shippers Export Declaration- SED (EEI)).
This will serve as a primer on the subject for those initially learning about U.S. export controls and licensing. In this section we focus on how to determine what, if any, USG export controls or restrictions apply to a contemplated export.
You will need to understand the previous modules on export policy objectives. This is oriented toward individuals who will be employed by exporters, freight forwarders and other who find themselves involved in facilitating U.S. exports which are subject to the U.S. Export Administration Regulations (EAR) and other USG export regulations.
For this reason you will find a variety of operational recommendations and admonitions. Regardless of whether or not you are primarily responsible for determining export requirements or are actually initiating an export shipment, if you become involved in facilitating an export, you are responsible for compliance with the EAR and other USG regulations. If you are perceived by authorities to have "acted with knowledge" of a violation, you may become the target of civil or criminal enforcement action under the EAR or other USG laws or regulations. For a list or various things which violate the EAR, refer to 15 CFR 764.2 (which you can find using the links in the resource module.)
This module is not an exhaustive treatment of all types of U.S. export controls, nor can it be used independent of the applicable USG regulations to determine specific export requirements and restrictions. I will not go over step-by-step instructions on how to apply for an export license—these are provided by the respective agencies as part of their application procedures. I will, however, provide links to this information plus sources of assistance from the respective agencies with license applications.
In making actual determinations as to U.S. export requirements and restrictions, including whether an export license may be required, direct reference to and understanding of applicable USG regulations is required.
Is License needed?
Will a Particular Export Require an Export License or Other Pre-authorization?
This information is intended to help exporters and their agents (typically freight forwarders) quickly recognize exports for which an export license is or may be required, or which may otherwise be restricted or illegal - it is important we notice "red flags" by having a basic understanding of why we restrict exports.
U.S. export controls are based on a combination of:
Commodity (product)
Destination,
Parties to the transaction
Look over the following 2 flowcharts carefully:
Decision Tree
Manufacturers, distributors and merchants who deal in a limited range of products have a relatively easy time understanding which prospective products, if any, may require a U.S. export license. A single phone call to the U.S. Department of Commerce (DOC), BIS Export Counseling Division may be conclusive for many exporters (see EAR, 15 CFR 730.8(c) for contact information).
However, even with products that are not regulated, a prospective exporter or agent still has to be concerned with sanctioned destination countries and the parties they sell and/or shop to. Exporters of products containing certain advanced technologies, those having military uses, those that are used in enrichment of nuclear materials, those that are simply in short supply within the U.S., or are of interest to terrorists are likely to be subject to export restrictions.
For these products, a prospective exporter may wish to seek a "Classification Request" from BIS to determine the applicable Export Control Classification Number (ECCN) which, in turn, will determine if such product is subject to product-based export restriction and licensing requirement. This list changes regularly, so it must be re-checked frequently. There is a convenient Internet web form for submitting classification requests or other inquiry to the BIS Export Counseling Division: the BIS Regulatory Inquiry Form (Links to an external site.)Links to an external site.. This is the informal way of seeking advisory assistance from BIS in anticipation of export opportunities.
With respect to a particular contemplated export, for which the product, destination and parties are known, DOC (BIS) will also provide an "advisory opinion" as to whether or not a license is required. These procedures are explained in the EAR, 15 CFR 748.3 (Links to an external site.)Links to an external site.. Although infrequent, a particular contemplated shipment may also face non-product type restrictions which must be considered. These include a denial order or other sanction against one or more party(s) to the transaction.
There are also reporting requirements and even bars to doing business with parties that request participation in restrictive trade practices. There is an excellent short overview of U.S. export controls on the BIS web site: See Export Control Basics. (Links to an external site.)Links to an external site.
Exporters of sensitive commodities and technology may face complex determinations as to when or what type of export license may be required and/or the applicability of a license exception, or whether exports may be made at all to certain destinations. In such cases, advisory assistance from the DOC, legal advice and expert preparation of license applications may all be advisable.
Acting on the behalf of others
Freight forwarders and other agents that agree to act as exporter on behalf of a non-resident principal (FPPI) may face additional challenges and risks in determining the possible need for an export license and other export requirements. There are several reasons for this, including:
Limited product knowledge – An agent, particularly a forwarder, typically becomes involved with a more diverse range of products than would a typical exporter, but with much less understanding of the product specifications, what the products are used for, etc. Forwarders rarely have the technical knowledge needed to properly classify a product in the U.S. Munitions List (overrides the CCL)(USML) or Commerce Control List (CCL) (i.e., determine the ECCN). This is true even with the manufacturer's specifications and data sheet.
Dependence upon USPPI for information – An agent must depend on the accuracy and honesty of the manufacturer or supplier (USPPI (Links to an external site.)Links to an external site.) who is not its customer, for descriptions and specifications of the products they ship, and for full disclosure of the contents of packages. Consequently, as nominal shippers they face greater risk of making illegal exports while having full legal responsibility as exporter of record. When acting as applicant for an export license, an agent's risk is further heightened since he becomes directly responsible for all the information supplied on the application, and for the assurance that what is subsequently exported does, in fact, exactly conform to the license.
Time pressure – The first awareness an agent may have of a pending export is often very shortly before goods are ready for shipment. This is particularly true for freight forwarders. Yet it may take days to determine export requirements; and, if an export license is needed, additional time will be needed to assemble required export license application documents, apply for the license and receive one. The consignee (Links to an external site.)Links to an external site. may exert considerable pressure to ship during this time.
Challenges for intermediaries
Challenges for Intermediaries
With respect to U.S. export controls, freight forwarders, 3PL professionals and other intermediaries, including all customer service and documentation staff, and especially managers and supervisors, should have sufficient understanding of export regulations to:
Provide sound advice. Answer basic questions which may be asked by clients; and then, if asked, redirect them to BIS or other expert help for direction on how such controls affect their particular products and transactions.
Forwarders rarely have sufficient technical product, usage and market expertise to provide specific advice as to whether a prospective shipment requires an export license. Forwarders must know how and when to limit advise.
Identify shipments that require, or may require, an export license. This is essential before providing advice about export controls, and also necessary to recognize actual shipments that may require a license or are subject to other restrictions, but do not have a license. To make this determination, a forwarder must know how to classify items in the CCL from available information, and refer to other applicable regulations covered herein. Needed information to determine export requirements can typically be found in a shipper's sales order, commercial invoice or quotation request document, and must include detailed product descriptions and destination party information.
Just because a forwarder may be able to determine if an export likely requires an export license does not mean that a forwarder should be advising the shipper as to this. Understanding licensing requirements is needed primarily to avoid complicity in an illegal export.
Screen exports involving sanctioned parties. A forwarder must not handle an export involving a person or organization in the U.S. or elsewhere, including the shipper, consignee, ultimate consignee or a nominal consignee, that is subject to a denial order, other BIS sanction list, Office of Foreign Asset Control (Links to an external site.) (Links to an external site.)Links to an external site.(OFAC) sanctions, or another sanctions list. There are now over a dozen separate government lists that must be checked with respect to sanctioned parties. Many forwarders now use automated services to routinely check against these lists as they enter transactions into their shipment processing systems. To ease the burden on those who do not, the U.S. Government has consolidated the various lists: Consolidated Screening List (Links to an external site.) (Links to an external site.)Links to an external site.. See heading Denied/Restricted Parties for much more on these "lists" and screening procedures.
Identify suspicious exports and avoid handling illegal exports based on an understanding of export regulations in general, and particularly from "Know Your Customer' Guidance and Red Flags" in the EAR (ref. 15 CFR 732 Supplement 3).
Step by Step Do I need a license
For this part you will need to read through this information - it is 16 pages and technical, but it provides the necessary steps to determining license requirements. You will be using this in both an assignment and a test so it should be read through carefully:
https://www.bis.doc.gov/index.php/forms-documents/regulations-docs/142-eccn-pdf/file (Links to an external site.)Links to an external site.
Also keep this FAQ for reference when completing assignments or tests.
https://www.bis.doc.gov/index.php/forms-documents/pdfs/286-licensing-faq/file (Links to an external site.)Links to an external site.
General Prohibitions
General Prohibitions
Study this section: 15 CFR 736.2. (Links to an external site.)Links to an external site.
This section of the EAR sets forth, in a logical sequence, a step-by-step, hierarchical set of rules ("prohibitions") that explain what a U.S. exporter or other U.S. person must NOT do—acts that will violate the EAA (Export Administration Act) and the EAR.
When applied to a particular contemplated export transaction, these prohibitions will help determine whether the export is prohibited, will require an export license, may be made under a license exception, or may be freely exported as no license required (NLR).
To apply this list of prohibitions, you must have the following information about a prospective export transaction:
CCL classification of the item(s) – What are the ECCN(s)?
Destination country(s) – What is the ultimate destination of the goods, and which intermediate country(s) will the goods pass through in-transit?
Are any of these countries subject to U.S. trade embargoes, U.N. embargoes with respect to the item(s) being shipped, or unusual U.S. trade restrictions?
Consignee and end-user – What is the nature and purpose of the end user, and is such party subject to denial orders, debarment (Links to an external site.)Links to an external site., OFAC sanctions or a party on the EAR Unverified Parties List (Links to an external site.)Links to an external site., a blocked entity or restricted entity?
End-use and conduct – What are the circumstances of the transaction? How is the consignee expected to use or dispose of the item?
Other involved parties – None of the parties involved in an export, including exporter, forwarder, and intermediate consignees may be subject top denial orders, debarment, OFAC or other export sanctions.
Much is summarized in the general prohibitions found here: http://www.ecfr.gov/cgi-bin/text-idx?mc=true&node=se15.2.736_12&rgn=div8 (Links to an external site.)Links to an external site. (Links to an external site.)Links to an external site. and will be summarized in the next section.
