New Export Clearance Requirements Could Mean Big Paperwork Burdens

Kelley Drye Client Advisory

The U.S. Commerce Department recently issued a proposal that could force your company to significantly alter its export paperwork practices. The proposal involves changes to the agency’s export clearance requirements, codified at 15 C.F.R. Part 758 of the Export Administration Regulations (EAR). Those requirements govern what information exporters are required to provide to the U.S. government at the time of export. While this might sound like a minor, esoteric issue, it matters a great deal in day-to-day export compliance. The proposed changes would require exporters to:

  • Identify the Export Control Classification Number (ECCN) for each exported item – excluding EAR99 items – on all export control documents,” including commercial invoices and contractual documentation.  Most companies only identify ECCNs on a select few documents, and even then only if the ECCNs are controlled for export. Many also don’t include the ECCN data on any commercial documents.
  • Identify an export’s ultimate destination country on the export control documents. This could require enhanced due diligence efforts on the exporter’s part in a broader range of transactions. Shipments to distributors might require ultimate destination information, which many distributors are loath to share with manufacturers for fear of losing sales.
  • Identify an export’s license number(s), license exception code(s), or the No License Required” (NLR) export authorization symbol on the export control documents.1
  • File Electronic Export Information (EEI) for all exports to Canada involving items controlled for National Security (NS), Nuclear Nonproliferation (NP), Missile Technology (MT), and Chemical & Biological Weapons (CB) reasons, regardless of licensing requirements.2    

Paperwork mistakes and omissions are among the most common export compliance failures, and these new requirements will likely up those numbers. With big penalties at stake, companies should consider how the new rules will affect them and share concerns with the Commerce Department. The agency will accept comments on its proposal until July 6, 2015. In addition to the specific feedback mentioned in the footnotes, commenters should also consider other export clearance improvement suggestions they might have.

For questions about this advisory, or for help in formulating your comments to the agency, please contact Eric McClafferty at emcclafferty@​kelleydrye.​com or (202) 342-8841.

[1] For this proposed change, BIS wants feedback on how the requirement might affect exports subject to mixed export control authorization or jurisdiction.
[2] BIS wants commenters to present information on (1) how this requirement would affect industry and trade volumes, and (2) ideas on alternative means of gathering data on implicated item exports to Canada.