Small business owners are often looking for creative ways to grow their businesses and tap into new markets. One way to do this is through offering goods to customers in other countries. However, exporting goods isn't always as easy as heading to the post office. It's wise to know how to find an ECCN number for your goods and to apply for an export license when government regulations require it.
What Is an ECCN Number?
An export control classification number is a five-character code that is assigned to goods being exported from the United States to other countries around the world. These numbers are listed in the commerce control list (CCL) and are broken down into categories and subcategories. The 10 main categories include the following:
- Category 0: Nuclear materials, facilities and equipment
- Category 1: Materials, chemicals, microorganisms and toxins
- Category 2: Materials processing
- Category 3: Electronics
- Category 4: Computers
- Category 5: Telecommunications and information safety
- Category 6: Sensors and lasers
- Category 7: Navigation and avionics
- Category 8: Marine
- Category 9: Aerospace and propulsion
The subgroups in the ECCN list classification system include the following:
- A: Systems, equipment and components
- B: Test, inspection and production equipment
- C: Material
- D: Software
- E: Technology
The first two characters in your ECCN number are determined by their category and subgroup. For instance, if you want to export marine detection software, the first two characters of your ECCN will be "8D".
ECCN Purpose and Use
The Bureau of Industry and Security is the part of the U.S. government responsible for overseeing export control and ECCN classification. Your product's ECCN might seem abstract to you or feel like one more thing to track in your business, but it's actually important for national security as well as to protect the economy and foreign policy efforts of the U.S.
This specialized number can help you find out if you need to secure an export license prior to sending goods to a customer in another country. Without this specialized coding system, keeping track of export requirements would feel even more overwhelming for business owners.
Difference Between ITAR and EAR
While the export administration regulations (EAR) and ECCN numbers probably apply to most small business owners, they are not the only thing to consider. The international traffic in arms regulations (ITAR) applies to goods, information and services created for military use.
Information on ITAR-regulated items is contained in the United States munitions list (USML) instead of in the CCL. While EAR is overseen by the Bureau of Industry and Security, ITAR is overseen by the U.S. Department of State, Directorate of Defense Trade Controls.
When to Use USML
Most goods that have dual use with the military and civilians are classified with an ECCN under EAR, including certain types of munitions that are available for general public use. Goods that fall under the USML include military equipment, information or services that are not available to the general public. These goods are strictly for military use.
Understanding when to use USML instead of EAR can be tricky. Just because something is used by the military does not mean it falls under USML. If you are unsure about your product's export classification, you can contact the Bureau of Industry of the U.S. Department of State for guidance. When in doubt, a consultant or lawyer can help you navigate the legal waters and ensure all your bases are covered.
Finding Your ECCN Number
While it's often relatively simple to figure out the first two digits of your ECCN, it can be tricky to figure out the remaining three characters. In the case of the marine detection software example, the first two characters are "8D". The CCL has some tricky legal language to wade through if you want to figure out the other digits.
For instance, according to the CCL, you must be able to determine whether the marine detection software is "'specially designed' or modified for the 'development,' 'production' or 'use' of equipment or materials, controlled by 8A (except 8A992), 8B or 8C".
If it is, then the ECCN would be 8D001. However, what if it is actually developed for operation or maintenance of things controlled by 8A609, 8B609 or 8C609? In that case, the ECCN would be 8D609. Most categories in the CCL include language like this that can make it difficult to determine your ECCN without outside help or guidance.
ECCN Classification Tool
Thankfully, the Bureau of Industry and Security has created an ECCN classification tool that you can access through its website. This tool guides you through a series of questions to help you figure out your ECCN more accurately than you might on your own. To begin, make sure your item is subject to the EAR. Then, choose from one of three options:
- Self-classify your item
- Contact the manufacturer
- Submit a request to BIS for classification help
After this, the classification tool will prompt you to answer a variety of questions pertaining to your goods. Most questions and answers include glossaries that help define technical terms that might otherwise be confusing. At the end of the self-classification process, you will be given a suggested ECCN or the designation of EAR99 for items that do not fit into already-designated ECCN categories.
Manufacturer ECCN Number Request
In some cases, you might remain unsure about answers to questions in the ECCN classification tool designed by the Bureau of Industry and Security. Thankfully, you can still determine the appropriate ECCN for your goods through other means. If you are not the manufacturer of your goods, try contacting the manufacturer. They are likely to know the ECCN number and should be willing to share it with you.
Even if the manufacturer shares the ECCN number it used, keep in mind that you are liable for ensuring it is correct before using it. The Bureau of Industry and Security can review the number you were given to confirm or deny that it is the appropriate ECCN for the goods you are exporting.
SNAP-R Export Classification
Even with access to the ECCN list, the ECCN classification tool and manufacturer guidance, you might still be confused about the best way to proceed in exporting your goods. The Bureau of Industry and Security has designed the simplified network application process redesigned (SNAP-R) to help meet your needs. Once you register for an account on the website, you have access to submitting commodity classification requests online.
You will provide SNAP-R with basic information about your goods, and it will categorize your goods for you and ensure you receive an accurate ECCN number. Be aware that you will need to wait for a response, so it might slow down how quickly you can ship the new marine detection software you designed. However, having legal peace of mind is probably worth it for both you and your customer.
Ensuring ECCN Number Accuracy
The only way to ensure ECCN number accuracy is by communicating with the Bureau of Industry and Security. If you're starting from scratch with a commodity classification request, an online SNAP-R request is the way to go. If you already have an idea of your ECCN but need to confirm that it is accurate, try calling the SNAP-R help desk instead. The help desk is available by phone Monday through Friday during regular business hours and can help to put your mind at ease or give you guidance about how to proceed.
Waiting to talk with SNAP-R representatives can be to your legal advantage, as there are steep penalties for making export errors. Criminal penalties include:
- Up to 20 years in prison
- $1 million in fines
Even administrative penalties can be steep and could cost you as much as $300,000, which could be enough to bankrupt many small businesses.
EAR99 and NLR
Many items designated with the code EAR99 are classified as "no license required" (NLR) and can be shipped more easily than items that require waiting for a license. Be careful because there are exceptions to this general rule. Be aware of the following circumstances:
- You are shipping to an embargoed country.
- You are shipping in support of a prohibited use.
- Your end user is of concern.
If any of these circumstances are or could be at play, be sure to contact the Bureau of Industry and Security. Even if your good is not categorized on the ECCN list as needing a license, you might actually need to apply for one before shipping your goods.
Risks of Using EAR99
Proper ECCN classification is key to keeping out of legal hot water when it comes to exporting your goods. If you classify something as EAR99 that should fall into another CCL category, you could face penalties and fines.
In addition, when businesses categorize goods as EAR99, they can sometimes fall into the habit of assuming no license is needed, which can also be troublesome. Some senders also forget that when an EAR99 shipment exceeds the value of $2,500, a record must be filed in the automated export system (AES).
Electronic Export Information
Electronic export information (EEI) is what you need to file in the AES when your export shipment exceeds the value of $2,500. You also need to file an EEI when any of the following conditions are at play:
- Goods shipped on an export license
- DOS, DOD or ITAR shipments
- Goods going to certain countries like Afghanistan or Iraq
If EEI is required for your shipment, your freight provider might offer the service of filing for you for a fee. Alternatively, you can file for free on the U.S. census website, which saves you money and gives you the opportunity to ensure all information submitted is accurate.
ECCN Numbers and Export Licensing
When you find an accurate ECCN number, you will be able to use the CCL in order to determine whether or not you are required to obtain an export license prior to shipping your goods. Keep in mind that even if the CCL indicates that no license is required, you might still need a license if you are shipping to a suspect end user, to embargoed countries or in support of prohibited activities.
The SNAP-R system offers online export license applications in addition to commodity classification services. You can log in to your SNAP-R account, select the export licensing section and enter all the required information in order to receive your license. Expect to wait for processing time and understand that your request might sometimes be denied by the government in order to protect U.S. interests or safety.
Regulations Apply to Everyone
Be aware that everyone in every circumstance is subject to following export regulations. This means that you must follow the same procedures for finding your ECCN and obtaining licenses (if required) whether you are a business or simply sending something to a friend.
This also means that the method of shipping you are using does not change whether or not you are required to follow export regulations. It does not matter to the government whether your goods arrive in the other country via FedEx, postal service or your suitcase.