EAR99, CCL, CCC, ECCN: Tips and checklists for export controls under US EAR

AEB presents a user’s guide to the alphabet soup of EAR99, CCL, CCC, and ECCN – because violations of US export control law can have severe consequences.

When companies are subject to US re-export control law under the EAR (Export Administration Regulations)

The United States claim extraterritorial jurisdiction for its export control law under the EAR – currently the only country in the world to do so. This means that non-US companies are also affected by the provisions of US re-export control law under the EAR – provided there is a link to US law.

Before comprehensive checks against the EAR can begin, the all-important question is: Which business operations, if any, have any link to the EAR? The EAR define two potentially relevant factors:

1. Item-based applicability of all US items worldwide (§ 734.3&4)
2. Person-based applicability of US persons (§ 734.5)

EAR: US item subject to the EAR or not?

Under § 743.3&4EAR, all US-origin items are subject to US EAR. “Subject to the EAR” is a term used in the EAR to describe those items and activities over which BIS (Bureau of Industry and Security) exercises regulatory jurisdiction under the EAR. The first step companies must take is to check whether their merchandise includes items subject to the EAR. The products subject to EAR as US items are defined in § 734.3§4 EAR:

• Under § 734.3(a)1 EAR, US items encompass all items in the United States, including in a US Foreign Trade Zone or moving in transit through the US from one foreign country to another.

Products manufactured in Germany are shipped through the Port of Miami to Central or South America. In Miami, the products are merely repackaged. The German products are then subject to EAR as US items at the time they are shipped from Miami. Once they leave the US, however, the “US item” attribute goes away again.

• Under § 734.3(a)(2) EAR, all US-origin items are also considered US products and are always subject to EAR – regardless of where in the world they happen to be. The EAR do not offer any legal definition of the term “US origin,” but based on how the term is used by the Bureau of Industry and Security (BIS) under the de minimis rule, US-origin items encompass everything manufactured, processed, assembled, or enhanced in the United States.

EAR99 pumps purchased from the United States are shipped from Germany to South Africa and from there to Sudan. Both the shipment from Germany to South Africa and the shipment from South Africa to Sudan are subject to EAR as re-exports.

• Under § 734.4 EAR, Supplement No. 2 to Part 734, foreign-made items that incorporate controlled US-origin items. The de minimis rule can mean that products manufactured in Germany are subject to EAR as US items.

For US items not affected by the above exclusions, the de minimis calculation is required only for “controlled” US origin items. Companies must identify which, if any, of those US-origin items would require a license from BIS if they were to be exported or re-exported (in the form in which you received them) to the foreign-made product’s country of destination. A product manufactured in Germany becomes a US item subject to the EAR only if it incorporates controlled US-origin items above the de minimis threshold – defined as 25% for all countries except Iran, Syria, Cuba, and North Korea, where it is 10%.

A company purchases non-listed, EAR99-classified standardized pumps from the US. The pumps are installed in machines manufactured in Germany that are to be shipped to customers in South Africa. If the pumps are shipped on their own to a company in South Africa, there is no license required. The pumps are not controlled items when the country of destination is South Africa. So they do not need to be included in the de minimis calculation. This means the machines are non-US products and not subject to the EAR.

• Under § 734.3(a)(4) EAR certain foreign-made direct products of US-origin technology or software, as described in §736.2(b)(3) are subject to the EAR.