The ECCN: What It Is, and Why You Need It
The process of exporting goods outside of the U.S. is not as simple as slapping a shipping label on a carton and sending the package on its way. When shipping items outside of U.S. borders, there are some important laws and regulations that you must adhere to, or else risk some major delays at the very least, and major fines and other sanctions at the worst.
One requirement that you may need to address when exporting technology is acquiring an ECCN. Short for Export Control Classification Number, the ECCN is an alphanumeric code that is assigned to specific items (which could be articles, technology, or software) by the U.S. Department of Commerce Bureau of Industry and Security (BIS.) The code identifies the controls that need to be placed on the items being exported, per international agreements. Not all of your items necessarily need ECCNs, but chances are, if you are involved in exporting anything related to software or technology, you will need this important code.
Dual Use, the CCL, and More
Not everything that is exported from the U.S. requires an ECCN. The law states that only those items that could potentially have “dual use,” meaning that they could be used by civilians or the military, are required to have an ECCN. That being said, there are more items that meet this definition than you might think.
To help manufacturers determine whether an ECCN is necessary, regulators have developed the Commerce Control List (CCL), which specifies the items that need to be coded. There are 11 specific categories of items (Nuclear & Miscellaneous; Materials, Chemicals, Microorganisms and Toxins; Materials Processing; Electronics; Computers; Telecommunications; Information Security; Sensors and Lasers; Navigation and Avionics; Marine; and Aerospace and Propulsion) which are designated by numbers, and each category has five subgroups (Systems, Equipment, and Components; Test, Inspection, and Production Equipment; Material; Software; and Technology) designated by a letter. If the product or item you intend to export falls into one of these categories and subgroups, then you have to have an ECCN.
There are two ways you can get an ECCN: Self-classifying or requesting one from the BIS. To self-classify, you must have a thorough understanding of the technical aspects of your item. First, you must determine the appropriate category and subgroup for your item, and then match the particular characteristics and functions of your item to one of the specific ECCNs that follow on the CCL. The ECCN for your item will then follow the format of Category Number-Subgroup Letter-Number that describes your specific device; it might look something like 9B123 for example. If you aren’t sure how to classify your item, you can request that the BIS do it for you.
Using the ECCN
One of the main reasons for the ECCN is to determine whether you need a license to export your goods. Whether or not you need a license depends on what you are exporting where. Different countries have different laws regarding the reasons for export control; some require a license for crime control reasons, while others do it for national security or arms control.
Once you’ve determined your ECCN, you need to compare it against the Commerce Country Chart to determine whether or not you need a license. On the CCL, under each ECCN entry, there is a chart which lists the reasons for control in each country. If there is an X under the box for the reason for the control in that country, then you will need to acquire a license to export your goods.
If there is no X in the box for the destination, then you do not need a license. There are some exceptions, though. If you are shipping items to embargoed nations (such as North Korea or Iran) or to those countries that have been identified as supporting terrorism, or to end-users “of concern,” then you will need to acquire an export license.
The process of exporting items overseas is complex, and if you are new to exporting, you want to consult the Export Administration Regulations from the Commerce Department and get advice and guidance from your local export authority. Rules change regularly, and failing to follow the most current guidelines could affect your business. In any case, though, understand that you need to confirm whether you need an ECCN or not, and take steps to secure that detail before you try to export your items.