Trading outside of the United States is exciting.
It opens you up to new markets. But it also presents unknowns.
And plenty of questions.
“What are some typical criteria for obtaining an export license?”
Naturally, you want to resolve doubts about how regulations might affect your business.
That’s why we’ll attempt to answer your most pressing questions here.
Let the learning begin!
What is an Export License
First off, don’t confuse it with an import license. They aren’t interchangeable and require a different approach.
This document basically says, “I’m approved to boost international trade by exporting a product to other countries.”
There are four classes:
- Open
- Specific
- Individual validated
- Multilateral validated
An open license is just like it sounds. Restrictions on the size of your shipment to an end user are relaxed.
The second group includes specific exports of the same type. They might be in short supply or available to be sent in bulk.
Monitoring international traffic is the purpose behind the first two. And the U.S. agency that’s responsible watches it closely.
The last couple primarily deal with export licenses for businesses with military ties. But army contractors selling defense items are another likely party.
Arms regulations and national security are the main focus.
Now that you have an overview, it makes sense to decide if you need a license.
Determine If Your Export Requires a License
Items subject to export regulations, such as licensing requirements, make up a small percentage of international trade. Around 5% to be more precise.
Your first step is to determine if you even need an export license.
The source of this answer will rest with either:
- U.S. Department of State’s Directorate of Defense Trade Controls (DDTC)
- Bureau of Industry and Security (BIS)
Also, evaluate the international buyer and their desired end use for your export. Having this information will be helpful later, so don’t put it off.
Commerce Department Export Control Classification Number
Under the United States Commerce Department, BIS is your best bet for feedback on any license requirements.
Items exported as dual-use normally fall under their Export Administration Regulations (EAR). This describes items with military, commercial, or proliferation applications.
Examples:
- Technology
- Software
Access the Commerce Control List (CCL) on the BIS website.
If your item has an Export Control Classification Number, keep reading to ensure compliance. Even if it doesn’t, double-check with BIS.
Because there are gray areas like deemed exports.
It’s better to be cautious and avoid any hits to your outstanding reputation as an exporter.
Moving on, we’ll zero in on the process.
How to Obtain an Export License
Visit the BIS website to get started.
Export licensing can conveniently be handled online via a fillable PDF. But paper is a better option unless you’re short on time.
Reasons to mail export license applications:
- Increased control over shipping dates and destinations (potentially)
- Extra room for an explanation of why your product requires agency approval
Foreign policy varies depending on any financial sanctions. Excluding these countries, our nation wants more business abroad.
Tap into that desire when you add detailed notes on your reason for applying. More detailed information is better than less.
Work closely with this federal agency and international trade compliance will ultimately benefit you. Not simply with the export transaction.
But in a solid track record of meeting licensing requirements.
Which helps your products reach their final destination consistently. Leading to happy customers.
Importance of Obtaining an Export License
Export licenses grant their holders various benefits.
One involves both crime control and protecting your commercial interests. From a purely business angle, these are very important.
Obtaining an export license specifically protects against:
- Transshipment
- Transfer
Foreign assets control is one role of the Department of Commerce, through BIS. And they’re really good at it.
Your foreign buyer must receive authorization before they can resell the licensed item.
Should you determine that they ignored this step, reach out to either BIS or DDTC. They will investigate further.
Thus, cushioning your company from financial loss is an advantage offered by a license to trade overseas.
Next, it’s worth talking about why you should follow export license regulations.
Legal Considerations
Regardless if a license is required, think about bringing on an international trade lawyer.
It covers you up in case of snags with your exports.
Your overall compliance program may be strong. But planning for more than the best case scenario is wise.
Meeting export regulations preemptively will allow you to stand out. Even in a crowded industry.
In the beginning, we told you to set aside any notes on the buyer’s intended use for your item. Now’s a good time to pull that out.
Uphold Commercial Security for Your Products
To recap, you’re concerned with the:
- End-use
- End-user
To the best of your ability, certify that your customer won’t use the product for illegal activity. Such as building chemical or nuclear weapons.
Because you don’t want to deal with the Nuclear Regulatory Commission.
Don’t neglect this step even if your product seems benign. After all, you’ve worked hard to grow your business.
And dealing with legal recourse for an overlooked liability won’t help.
Now let’s talk about the actual buyer.
The Office of Foreign Assets Control (OFAC) regularly updates a list of “persona non grata.” Refer to this before conducting business with new international clients.
Listed parties that are restricted from trade with your business:
- Organizations
- Businesses
- Individuals
Finally, the EAR shares embargoed nations that can receive exports in rare situations.
Perhaps you’d prefer professional assistance to safeguard your goods as they travel abroad.
Allow us the privilege of filling this role!
Reidel Law Firm Helping Your Exported Shipment
As experts in international trade law, we can help you handle the legal aspects of export licenses.
And in doing so, keep customs and other trade regulators satisfied with reporting and filing.
Conducting business across borders becomes much easier when they see reasonable care taken. We are your partners in making this a reality.
Our international trade law division also supports:
- Import Compliance
- Litigation before the Court of International Trade (Section 337, anti-dumping/countervailing, and other trade-related cases)
- Trade Compliance Audits and Training
Call Reidel Law Firm today at (832) 510-3292 or fill out our form to see how we can help you with export license concerns.
