Jurisdiction, Classification and Licensing: A Primer
Article Summary
Export control jurisdiction determines whether an item is regulated under ITAR (defense articles) or EAR (dual-use items).
Classification involves comparing an item’s technical specifications to the USML or CCL to determine its regulatory category.
ITAR governs defense articles and services under the USML, while EAR regulates dual-use items under the CCL.
ECCNs (Export Control Classification Numbers) identify specific items on the CCL and determine licensing requirements.
Items not listed default to EAR99, meaning they generally do not require a license unless subject to specific restrictions.
Licenses for ITAR items are submitted via DDTC’s DTrade, while EAR licenses are processed through BIS’s SNAP-R portal
Export control can be baffling to newcomers. It is a blizzard of acronyms, “defined terms,” and citations. In our compliance practice, we often have to lay out the basics for new clients in order to even discuss their situation. Many others know bits and pieces but don’t see how the puzzle fits together. So to any compliance veteran reading this, go no further. What follows is a primer, plain and simple.
First, there are two primary jurisdictions in U.S. export controls, one controlling evidently military items and the other overseeing “dual use” items, that is, commercial goods that could potentially have military applications. The jurisdiction determination must be done first since that dictates the applicable regulations and licensing body, as explained below.
The State Department’s Directorate of Defense Trade Controls (DDTC) has jurisdiction over defense articles and defense services covered by the U.S. Munitions List (USML) pursuant to the International Traffic in Arms Regulations (ITAR). On the dual use side, the Commerce Department’s Bureau of Industry and Security (BIS) has jurisdiction over dual use items covered by the Commerce Control List (CCL) pursuant to the Export Administration Regulations (EAR).
As for the actual classification, you must compare the technical specifications of your item against the relevant USML and CCL entries (in that order) to see if the item is specified on either list. It doesn’t help that these two lists are organized very differently and also have variance in their terminology. The USML is divided into 21 different categories, each with many control entries describing various subsets. The CCL uses 10 categories, each containing several 5-digit Export Control Classification Numbers (ECCNs), as we will explain further below.
- Controls for physical items are indicated with an ‘A’ in the ECCN (e.g., 3A611);
- Test, inspection, and production equipment have a ‘B’ (e.g., 5B002);
- Controls on certain materials are denoted with a ‘C’ in the ECCN (e.g., 1C010);
- Software controls are indicated with a ‘D’, (e.g., 6D201);
- “Technology” controls have an ‘E’ in the ECCN (e.g., 9E991).
If your item is described by one of the ECCNs on the CCL, then any related technical data could rise to the level of controlled “development technology,” “production technology,” and/or “use technology,” each of which is a defined term under the EAR.
Let’s say for example your technical data rises to the level of controlled technology. The next step is to compare the “Reasons for Control” listed in the ECCN entry against your export destination on the Commerce Country Chart). If there is an ‘X’ in the box at the intersection of your export destination and the applicable reason(s) for control, an export license is required from BIS unless the transaction satisfies the requirements of one of the License Exceptions provided in the EAR.
If, on the other hand, your item is not described on the CCL, then the tech data will default to a classification of EAR99 and you won’t need an export license from BIS to export the data.
If a license is required, export license applications are submitted to BIS through their online portal called SNAP-R. License applications for ITAR items are submitted to DDTC through DTrade.
That’s it. Simple enough, right?
Key Points
What is export control jurisdiction?
Export control jurisdiction determines which regulatory framework applies to an item:
- ITAR (International Traffic in Arms Regulations): Overseen by the State Department’s Directorate of Defense Trade Controls (DDTC), ITAR governs defense articles and services listed on the United States Munitions List (USML).
- EAR (Export Administration Regulations): Overseen by the Commerce Department’s Bureau of Industry and Security (BIS), EAR regulates dual-use items listed on the Commerce Control List (CCL).
Jurisdiction must be determined first, as it dictates the applicable regulations and licensing body.
What is the export classification process?
The classification process involves:
- Comparing an item’s technical specifications to entries on the USML and CCL.
- Determining whether the item is explicitly listed or falls under the “specially designed” criteria.
- Identifying the appropriate Export Control Classification Number (ECCN) for CCL items.
Classification is critical for determining licensing requirements and ensuring compliance with export regulations.
What are the key differences between ITAR and EAR?
- ITAR:
- Governs defense articles and services.
- Items are listed on the USML, which is divided into 21 categories.
- Licensing is stricter, with fewer exceptions.
- EAR:
- Regulates dual-use items (commercial items with potential military applications).
- Items are listed on the CCL, which uses 10 categories and ECCNs to classify items.
- Offers more flexible licensing options, including license exceptions.
What is the role of ECCNs in export classification?
- Export Control Classification Numbers (ECCNs) are used to classify items on the CCL.
- ECCNs are structured as five-character alphanumeric codes, with the first character indicating the category:
- A: Physical items (e.g., 3A611).
- B: Test, inspection, and production equipment (e.g., 5B002).
- C: Materials (e.g., 1C010).
- D: Software (e.g., 6D201).
- E: Technology (e.g., 9E991).
- ECCNs determine the Reasons for Control and whether a license is required for export to specific destinations.
What happens if an item is not listed on the USML or CCL?
- Items not explicitly listed on the USML or CCL default to EAR99.
- EAR99 items:
- Are subject to minimal restrictions.
- Generally do not require a license unless exported to embargoed countries, restricted end-users, or for prohibited end-uses.
- EAR99 classification simplifies compliance for most commercial items.
How are export licenses obtained?
- Export licenses are required for items that meet specific control criteria:
- ITAR items: Licenses are submitted to DDTC via the DTrade portal.
- EAR items: Licenses are submitted to BIS via the SNAP-R portal.
- The licensing process involves:
- Providing detailed information about the item, end-user, and destination.
- Justifying the need for export and ensuring compliance with applicable regulations.
- License exceptions may apply under EAR, reducing the need for individual licenses in certain cases.
