INTERNATIONAL TRADE LAW
Trade Compliance Basics: A Cheat Sheet
Trade compliance is the practice of following the U.S. laws that govern moving goods, money, and technology across borders — and proving you did. It is not one rulebook. An ordinary importer-exporter answers to several federal agencies at once, each with its own duties and penalties, and getting one right does not excuse getting another wrong. This cheat sheet covers the agencies, the core duties on both the import and export side, and the legal standard that ties them together.
The Four Agencies You Answer To
There is no single “trade law.” Most U.S. companies that buy or sell across borders deal with four agencies, sometimes on the same shipment.
| Agency | Department | What it governs |
|---|---|---|
| Customs and Border Protection (CBP) | Homeland Security | Imports: classification, valuation, country of origin, duties, recordkeeping |
| Bureau of Industry and Security (BIS) | Commerce | Dual-use exports under the Export Administration Regulations (EAR) |
| Directorate of Defense Trade Controls (DDTC) | State | Defense articles and services under the International Traffic in Arms Regulations (ITAR) |
| Office of Foreign Assets Control (OFAC) | Treasury | Economic sanctions and blocked-party screening |
The practical takeaway: an export that clears BIS can still violate OFAC if the buyer is sanctioned, and a correctly licensed shipment can still draw a customs penalty if the import side was mishandled. Compliance means satisfying each agency that touches the transaction.
The Importer’s Core Duties
On the import side, CBP expects you to get four things right on every entry.
- Classification. Assign the correct Harmonized Tariff Schedule (HTS) code. The code drives the duty rate and whether other rules apply. (See the basics of tariff classification.)
- Valuation. Declare an honest, properly built customs value — generally the price paid or payable, with required additions.
- Country of origin. Determine and mark origin correctly; it affects duty rates, trade-remedy exposure, and labeling. (See country-of-origin labels.)
- Special duties. Check whether antidumping or countervailing duties apply to your goods. (See antidumping and countervailing duties.)
All of this runs under one legal standard: reasonable care. Since the Customs Modernization Act of 1993, the importer of record — not the broker — bears the legal responsibility to use reasonable care in declaring classification, value, and origin. CBP determines the final liability, but the duty to get it right, and to keep the records that prove it, sits with you.
The Exporter’s Core Duties
On the export side, the central question is whether what you are shipping, where it is going, and who is receiving it require a license.
- Classify the item. Determine the Export Control Classification Number (ECCN) on the Commerce Control List, or whether the item is “EAR99.” Defense articles fall under the ITAR and the U.S. Munitions List instead.
- Screen the parties. Check customers, end users, and intermediaries against the Consolidated Screening List and OFAC’s sanctions lists before shipping.
- Watch the end use and destination. Some destinations and uses require a license or are flatly prohibited, regardless of the item.
When in doubt, the safe move is to classify and screen before you ship — not after.
What a Basic Program Looks Like
Compliance is a set of repeatable controls, not a binder on a shelf. A workable starter program covers five things, and each has its own cheat sheet in this series:
- A risk assessment to find where you are most exposed — see the trade compliance risk assessment cheat sheet.
- Recordkeeping that meets the retention rules — see the recordkeeping cheat sheet.
- Awareness of what goes wrong and what it costs — see the penalties and fines cheat sheet.
- Trained people, ideally with a recognized credential — see the certifications cheat sheet.
- A way to test the program and correct errors, including voluntary disclosure when something slips.
Frequently Asked Questions
What is trade compliance in simple terms?
Trade compliance is following the U.S. rules for importing and exporting — correct classification, honest valuation, proper origin, party screening, licensing where required, and recordkeeping — and being able to prove you did. It spans several agencies, not one.
Who is legally responsible for getting an import right?
The importer of record. Under the reasonable-care standard, the legal duty to declare correct classification, value, and origin sits with the importer, even when a customs broker files the entry on its behalf.
Do small businesses really need a compliance program?
Yes. Penalties under the customs and export statutes apply regardless of company size, and “we didn’t know” is not a defense. A right-sized program — screening, recordkeeping, and a basic risk review — is far cheaper than a single enforcement action.
Is sanctions screening separate from export licensing?
Yes. An export can be licensable through Commerce (BIS) yet still illegal if the buyer or destination is sanctioned by OFAC. The two checks are independent, and you have to clear both.
Trade compliance touches customs, export controls, and sanctions at the same time, and a gap in any one can stop a shipment or trigger penalties. Reidel Law Firm helps importers and exporters map their obligations and build practical programs on flat-fee terms. Get an import/export compliance memo.
