EAR99, CCL, ECCN, and more: tips and checks for US export controls

Under the EAR (Export Administration Regulations), the United States claims extraterritorial jurisdiction for its export controls – currently the only country to do so. Which is why companies based outside the US also have to deal with US re-export control regulations under the EAR when trading in civilian US items.

The extraterritoriality follows from the concept of re-export, which means that shipments outside the US also fall within the scope of the EAR. EAR § 734.14 defines a re-export under EAR as follows:

§ 734.14 RE-EXPORT
(…)
(1) An actual shipment or transmission of an item subject to the EAR from one foreign country to another foreign country, [...]
(…)

Although the EAR applies to all countries worldwide, extraterritorial application is limited to “items subject to the EAR.” Before beginning with comprehensive EAR screening, it’s best to first check which business transactions have any link to the US and thus fall within the scope of the EAR. The EAR cites two scenarios as possible links:

1. Item-based applicability of all US items worldwide (§ 734.3/4/9)
2. Person-based applicability for certain activities of US persons (§ 734.5)

All US civilian products worldwide fall within the scope of US re-export control under the EAR. The definitive list of such products can be found in § 734.3/4/9 EAR. This means that all companies outside the US must first determine whether their product master includes any US items. 

In addition to those provisions that define applicability by item, § 734.5 EAR defines it by person – specifically, activities of US persons. This is why companies should take the additional step of checking whether they are within the scope of the EAR based on the activities of US persons. The term “US person” is defined in § 772.1 EAR as

• any US citizen;
• any permanent resident (especially Green Card holder), irrespective of where that person currently is;
• any person of any nationality who resides in the US;
• any person in the US;
• any juridical person organized under the laws of the US, including foreign branches in the US.

An important thing to remember here: There is no definition of “US person” that is valid for all US legislation. The definition can vary depending on which US law is applicable. Business transactions with embargoed countries, for example, are governed by the Office of Foreign Assets Control (OFAC), which defines US persons differently than the EAR. The definition of the term “US person” must be checked separately for each law. Definitions of the term “US person” that differ from those of the EAR can be found, for example, in 31 CFR § 560.215 of the Iranian Transactions and Sanctions Regulations (ITSR) for business transactions with Iran.

Companies outside the US are generally organized under the applicable national law and not US law, so they are not US persons under the EAR. This is true even if such companies employ US persons, such as US citizens.

Companies outside the US should focus on US items. If the company’s product portfolio includes US items, it’s a good idea to identify them as such and classify them. This is the only way to ensure compliance with the provisions of US re-export control law for US items under the EAR.

The US Bureau of Industry and Security (BIS) offers a range of helpful tools on its website. The Exporter Portal offers technical FAQs and Decision Tree Tools to help with various checks such as:

• CCL Order of Review
• Specially Designed
• STA
• De minimis & Direct Product Rules