An essential step in export compliance is determining whether a license is required from the Department of Commerce to export a commodity. This is done by ascertaining whether the item has a specific Export Control Classification Number (ECCN).
Export Control Classification Number (ECCN) are five-digit alphanumeric designations established by the commerce control list (CCL) to identify items that fall under Export Administration Regulations (EAR).
An ECCN categorizes items based on the nature of the product, i.e. the type of commodity, technology or software as well as its respective technical aspects.
ECCN’s are different from Schedule B numbers, which are used by the Bureau of Census to collect trade statistics, as well as HS codes, which are used by Customs and Border Protection to determine duty rates.
Once the ECCN has been identified, an exporter can discover the reasons for the licensing requirements, which transactions may require an export license, and which license exemptions, if any, may apply.
What is the Commerce Control List?
The Commerce Control List (CCL) identifies those items regulated by the commerce department’s Bureau of Industry and Security (BIS). Necessary to determining an item’s ECCN is proper review of the CCL.
The first digit of the ECCN represents the category of an item as outlined by the Commerce Control List. Each of these categories are subdivided into five product groups which gives the second character of the ECCN. The final digits of the export control classification number are provided by the Commerce Control List and are based on the specific characteristics and functions of an item.
Commerce Control List Categories
0 = Nuclear materials, facilities and equipment (and miscellaneous items)
1 = Materials, Chemicals, Microorganisms and Toxins
2 = Materials Processing
3 = Electronics
4 = Computers
5 = Telecommunications and Information Security
6 = Sensors and Lasers
7 = Navigation and Avionics
8 = Marine
9 = Propulsion Systems, Space Vehicles, and Related Equipment
- Systems, Equipment and Components
- Test, Inspection and Production Equipment
How to Determine a Product’s ECCN:
There are three approaches to determining a commodity’s export control classification number:
- Go to the Source
Contact the item’s manufacturer to see if they have a current ECCN. ECCNs do change over time, so review and proper due diligence is still required to ensure that the exporter is in agreement.
Self-classifying an item requires a technical understanding of the item as well as familiarity with the structure and format of the commerce control list.To properly classify an item against the CCL, begin with the product’s control list category and then determine its product group. Once these are identified, match the commodity’s functions and individual characteristics to the ECCNs provided by the commerce control list.
- Official Request to BIS
Exporters can submit an official request for a commodity classification from the Bureau of Industry and Security (BIS). To do so, exporters will need a company identification number (CIN) to access the online system.Official requests to BIS can take a significant amount of time and are limited to six items (unless given an exemption by BIS on a case-by-case basis for closely related items).
What does a designation of EAR99 mean?
The majority of goods exported from the United States do not require an export license.
If an item does not fit within the parameters of an ECCN (generally low technology consumer goods), but is still subject to the EAR and not under the control of another federal agency, the item can be designated as EAR99 and require no license if:
- The item is not being shipped to a sanctioned destination
- The item is not being shipped to a denied party, sanctioned entity, or prohibited end-user
The item will not be used for a specific end-use, which may be subject to higher controls.
How Descartes Can Help?
The meticulous nature of classification is challenging. When multiple clients, business units, time zones and product lines come into play, effective classification can become a sink for vital time and resources.
For more information on how Descartes can help you with your Export Control Classification Number and other export classification requirements, please click here.
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