HOST: What do you need to be aware of
when exporting an EAR99 item?
How do you prevent
your company or yourself
from being involved in illegal
or prohibited shipments?
Are there lists you can screen
your customers against?
What types of information
should you pay attention to
that would raise a concern
about your transaction?
These are all questions you may have,
and we have the answers.
Hello, my name is Clariebel,
and I work for the Bureau
of Industry and Security
at the U.S. Department
of Commerce.
The following clip is an example
of the type of call our agency
often receives from exporters
regarding screening of transactions
for exports of EAR99 items.
EAR99 is a basket category
designated to cover
most commercial items
that are exported
out of the United States.
If your item is not described
in an Export Control Classification Number
on the Commerce Control List,
then it is designated as EAR99.
I hope that it will explain
the importance
of screening your transaction
when exporting commercial products.
Let's get started.
[telephone rings]
COUNSELOR: Hello. Exporter Counseling,
this is Douglas speaking.
How may I assist you?
CALLER: Hi. I think I spoke
to you earlier.
I am exporting parts
for a printing press to England,
and my forwarder asked me about
the Export Control Classification Number,
or ECCN, for my product.
COUNSELOR: Yes, I think I remember.
You were going to give us
a call back
after you had reviewed
the Commerce Control List
to try to find your ECCN
for the item, correct?
CALLER: Yes, that's right.
After we spoke, I went to the BIS website,
www.bis.doc.gov,
and didn't find my items listed anywhere
on the Commerce Control List,
so I determined that my items
are EAR99.
But I still have a few questions.
COUNSELOR: Well, I'm happy
to help you with those.
What questions do you have?
CALLER: I was thinking--
since the items are not
on the Commerce Control List,
and therefore
are designated EAR99,
do I just go ahead and ship?
COUNSELOR: Well, not quite.
Although you're right,
items designated as EAR99
are not listed under any ECCN
on the Commerce Control List,
they are still subject
to the Export Administration Regulations,
or EAR, and you do need
to be aware
that in some circumstances
a license may be required
even for an EAR99 item.
CALLER: Really?
I thought that EAR99 meant
that there weren't any restrictions
and that I could ship using the designation
No License Required, or NLR,
in the Automated Export
Record System.
COUNSELOR: Well, you're
halfway there.
In general, items that
are designated as EAR99
can be exported to almost
all destinations without a license
under the designation NLR,
or "No License Required."
But if your proposed export
is to an end-user of concern,
in support of a prohibited end-use,
or to an embargoed country
or sanctioned country,
you may be required
to obtain a license
and in some cases not to be
authorized to export at all.
CALLER: I think you did mention that
when we first spoke.
COUNSELOR: Yes, it's important
to keep in mind
that a license requirement
may be triggered
for a transaction that does not
normally require a license,
and that would be based
on the end-use or end-user.
CALLER: I know who my customer is,
and they're in the printing business.
What should I look for?
COUNSELOR: Well, the EAR contains
end-user and end-use controls
that are related to nuclear,
missile technology,
and chemical and biological weapons
in countries of concern,
or, in some cases, worldwide.
These regulations, they ensure
that transactions that raise
proliferation concerns
are reviewed by BIS,
Bureau of Industry and Security, first.
On our homepage, you can select
"Export Administration Regulations,"
and when you click on that link,
you'll be able to read to Part 744
and get more information
on end-user and end-use controls.
CALLER: I can see
why we would want to be sure
that U.S. products aren't going
to those types of activities!
COUNSELOR: Yes, in fact,
BIS may also inform the exporter
that a license is required
when there is
an unacceptable risk
of use in or diversion to any
of the specified activities.
One way we inform the public
about the proliferation
and end-user concerns
is through the Entity List.
It includes entities
whose activities impose a risk
of diverting items to programs related
to weapons of mass destruction.
It also includes certain entities
sanctioned by
the U.S. Department of State.
CALLER: Where do I find this list?
COUNSELOR: Are you still
on our website?
CALLER: Yes, let me go back
to the homepage.
COUNSELOR: That's always
a good place to start.
The link is located right there.
On the left hand side
of our homepage,
under the red box
that says "Exporter Resources,"
you'll see a link
that says "Lists to Check."
If you click on that link,
you will find the Entity List
which we just discussed.
CALLER: I see, but what about
these other lists on the page?
COUNSELOR: Yes, as you point out,
there are several lists:
the Denied Persons List,
the Unverified List,
the Entity List,
they are supplied by BIS.
You will also see links to
the Specially Designated Nationals List
supplied by the Treasury Department;
and the Debarred List
and Nonproliferation Sanctions List.
Those are supplied
by the State Department.
CALLER: I don't want to get
into trouble here.
So what does it mean if my customer
is on one of these lists
Does it mean
I can't export to them?
COUNSELOR: Not necessarily.
For example, if a party to a transaction
is on the Entity List,
you may need to apply
for a license.
The Denied Persons List
is a list of parties
that have been denied
export privileges
because they violated the EAR,
Export Administration Regulations.
Dealing with one of these parties
would be a violation of a denial order.
CALLER: What about
the Unverified List?
COUNSELOR: The Unverified List
actually serves as a red flag.
It's there to alert exporters
that BIS could not verify
an end-user in other transactions.
A red flag itself does not create
an automatic license requirement.
CALLER: Hey, I was in a band
called the Red Flags
when I was in school.
I have a feeling that those aren't
the red flags that you're talking about!
COUNSELOR: You're right about that.
Red flags refer
to abnormal circumstances
indicating that the export
may be destined
for an inappropriate end-use,
end-user, or destination.
For example, an order for items
that are inconsistent
with the needs of the purchaser,
such as a restaurant wholesaler
ordering a machine tool,
or a new customer declining
installation and testing
when those are included
in the sales price.
CALLER: So what do I do
if I think there's a red flag?
COUNSELOR: Well, when red flags
are raised,
you have a duty to check out
the suspicious circumstances
and inquire further.
The purpose of this inquiry
and reevaluation
is to determine
whether the red flags
can be explained or justified
so as to evidence
the bona fides of the party
and the legitimacy
of the transaction.
If they can, you may proceed
with the transaction.
BIS provides "Red Flags"
and "Know Your Customer" guidance
to help exporters recognize
suspicious transactions.
You can find these on the Enforcement
section of our website.
CALLER: I'll be sure
to check that out.
COUNSELOR: In fact,
BIS recommends
that businesses adopt
export compliance measures
to make it easier to comply
with the regulations.
Take a look at the link
on our homepage
called "Compliance Program Assistance."
We've also created
an Online Training Room
with training modules
and archived webinars.
Select "Seminars and Training"
on our homepage.
CALLER: So let me go
back over this
to make sure I understand
what we covered.
When I export an item
that's an EAR99 item,
I want to consider
whether the country I'm shipping to
is sanctioned or embargoed,
whether the customer
is going to use the item
for a bad end-use
like nuclear proliferation
and whether my customer is
one of those prohibited parties
like the Denied Persons List
or the Entity List.
If nothing comes up
and there's nothing out of the ordinary
that raises concern,
red flag, as you like to say,
then I ship NLR?
COUNSELOR: You've got it.
CALLER: Thanks so much.
I can see that I have obligations
even for an EAR99 item--
it's not a free pass
to exporting!
It is the least I can do
to protect U.S. national security
and foreign policy interests
and prevent my company from
committing export control violations.
COUNSELOR: Yes, always exercise
your due diligence
and determine what actions
you need to take, if any.
If in doubt, you can
always give us a call.
HOST: We hope we have answered
some of your questions
regarding screening
your transaction
when exporting items that do not
normally require an export license.
You should consider whether
the country you are shipping to
is sanctioned or embargoed,
whether your customer
is going to use the item
for a bad end-use
like nuclear proliferation
and whether your customer is on
one of those prohibited parties lists
like the Denied Persons List
or Entity List.
You should be aware
of possible red flags in your transaction
and be familiar with
the Know Your Customer guidance
that BIS provides
to avoid dealing with unauthorized
parties or transactions.
Thank you and have a great day.