Each year, thousands of small businesses discover the benefits of exporting their products abroad.
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While the U.S. government encourages most export activities, it also places restrictions called export controls on certain goods and destinations. If exporting is in your company's future, understanding export controls needs to be at the top of your to-do list.
Export controls are designed to protect U.S. interests by regulating the kinds of products that are shipped to certain countries, individuals, and organizations. Some – but not all – exports require an export license from BIS (Bureau of Industry and Security), a subdivision of the U.S. Department of Commerce. It's important to know that the manner in which you ship your product has no bearing on its licensing requirement. For example, a piece of software could require an export license regardless of whether it is physically shipped or sent electronically via the internet.
BIS considers a number of factors in deciding whether your export activity will require licensing. Generally, these factors involve the product that is being exported, its destination, the product's end-user, and ultimately the end-use itself. The first step is to classify your product according to the Export Control Classification Number system (ECCN) and cross-check your product's export classification against the Commerce Control List. The classification process can be complicated, so the BIS provides practical assistance on their website at www.bis.doc.gov. If you expect to regularly export products that may require a license, it might also be helpful to participate in a BIS-sponsored export control seminar.
Equipped with your product's ECCN, the next step is to make sure the intended destination for your product has been approved by BIS. Restrictions most often occur in embargoed countries or in countries where BIS has identified a significant terrorist presence. By cross-referencing your product's ECCN in the Commerce Country Chart, you can quickly ascertain whether your products have been cleared for export to the destination country or whether your activities will require additional licensing.
In addition to restrictions on products and destinations, BIS may additional prohibit exports to specific individuals and organizations. Export recipients are usually disqualified for reasons unrelated to the types of products most small businesses produce. Manufacturing weapons of mass destruction, dealing in illegal narcotics, and involvement in terrorist activities are obvious red flags for BIS. However, you should be aware that export controls may still apply to these individuals – even if the product you are exporting is completely unrelated to the individual or organization's illegal activity. For the same reasons, BIS may further regulate exports based on their end-use, regardless of who will receive the product on the other end.strong>
No License Required
The vast majority of exports do not require special licensing by BIS. If the product does not fall under any of the product, destination, or end-use restrictions, it is simply exported under a NLR (No License Required) designation.