The U.S. Commerce Department’s Bureau of Industry and Security (BIS) issued a new proposed rule that could require your company to devote substantial resources to export recordkeeping. The agency is soliciting suggestions on how it can improve its export clearance requirements. Those requirements, codified at 15 C.F.R. Part 758 of the Export Administration Regulations (EAR) cover what information exporters are required to provide to the U.S. government at the time of export. While this might sound like a minor, esoteric issue, proposed rules could have significant effects on your company’s export compliance program. Those changes would require exporters to:
- Identify the Export Control Classification Number (ECCN) for each item exported, excluding EAR99 items, on all “export control documents” (including commercial invoices and contractual documentation). Most companies only identify sensitive, export controlled ECCN’s on selected documents. This requirement could cause a tremendous amount of work.
- Identify an export’s ultimate destination country on the export control documents. Currently, many companies focus on the “ship to” country for export control documents. Having to determine the country of ultimate destination for non-sensitive items could cause a tremendous amount of work.
- Identify an export’s license number(s), license exception code(s), or the “No License Required” (NLR) export authorization symbol on the export control documents.1
- File Electronic Export Information (EEI) for all exports to Canada involving items controlled for National Security (NS), Nuclear Nonproliferation (NP), Missile Technology (MT), and Chemical & Biological Weapons (CB) reasons, regardless of licensing requirements.2
In short, these proposed paperwork changes could cause significant headaches for your company’s frontline export compliance team, especially if they go unnoticed. Failing to comply with these recordkeeping requirements would involve a violation of the EAR, which can lead to significant penalties, particularly if there are repeated violations. Companies should carefully consider how these proposed rules will affect their operations and think about submitting comments to the agency. Comments on the agency’s advanced notice of proposed rulemaking are open until July 6, 2015. In addition to the specific feedback mentioned in the footnotes, commenters should also consider other export clearance improvement suggestions they might have.