Expanding your business to international markets can be exciting. However, it’s essential to understand that shipping your products across borders is one thing, and exporting is another thing.
Various countries have regulations and restrictions to protect their economies, national security, and the environment. And that’s where export licensing plays a critical role.
Export licensing acts as a safeguard for your business and the government. It ensures that goods or services do not fall into the wrong hands, threaten national security, or harm the environment.
This quick guide will teach you how to obtain an export license. But before then, let’s look at what export licensing is, the types, and the requirements for obtaining it.
Let’s dive in!
What is Export Licensing?
An export license is a document exporters need when shipping restricted goods internationally. The Bureau of Industry and Security is responsible for issuing the document to maintain legal compliance and national security.
The license acts as proof that you are authorised to export specific goods. It includes details such as the sender, recipient, and quantity of the goods to be shipped.
Export Licensing Requirements
Export Licensing Requirements are the rules and regulations governing the exportation of certain products. The government sets these requirements to ensure security, legal compliance and availability of certain products.
The licensing requirements vary from one country to the other depending on the type of goods or technology you intend to export and the destination country or recipient.
While the requirements are varied, there are primary considerations that the governing bodies make when setting them.
Here are some general guidelines on export licensing requirements:
Export control laws and regulations
Different countries have a set of rules and regulations guiding the exportation of products. For instance, in the United States, the Export Administration Regulations (EAR) and the International Traffic in Arms Regulations (ITAR) govern the export of goods and technologies.
Restricted product types
Military equipment and dual-use goods with potential national security implications will likely require an export license.
Additionally, products falling under certain categories are designed for specific use cases and exporting them would require a license clearly defining the intended use.
For instance, certain technologies which have the potential to develop weapons or sensitive applications must be controlled to ensure they are used with the right intentions.
Destination Country
The Office of Foreign Asset Control (OFAC) and ITAR limit trade activities in some countries. These limitations include monetary and shipping sanctions. The restrictions may demand an export license when shipping into such countries.
For instance, a license from OFAC is required when shipping cotton seeds to Iran.
Licensing exceptions
Export Administration Regulation (EAR) provides a list of exceptions for certain types of exports, depending on factors such as the value of the goods, the nature of the transaction, or the destination country.
The Quantity of goods being exported
The government may restrict the quantity of products leaving the country to ensure their availability within the local markets and fair trade.
Post-shipment control
Some countries may require exporters to have a system to monitor and verify the end-use of the exported goods.
For instance, different European countries implement on-site inspection to monitor exported military material to ensure availability and ascertain that they are possessed by the intended end users.
How to get an export license [4 Easy Steps]
Here is a step-by-step guide to obtaining an export license:
#1 Determine if you need an export license
To determine if you require an export license, consult your country’s export control authority or a consultant with expertise in export regulations.
There are various activities involved in establishing if you need an export license, including:
· Classifying your goods according to the Export Control Classification Number (ECCN) or Schedule B Number. The Commerce Control List (CCL) and the Census Bureau’s Schedule B Search Engine can help obtain the ECCN and Schedule B Number.
· Determining the end user of your product and the destination country. The Consolidated Screening List (CSL) and the Country Chart in the Export Administration Regulations (EAR) can help identify end user and country restrictions.
· Applying relevant export license exceptions, if any EAR provides a list of exceptions and eligibility criteria for exporting certain products without a license.
#2 Prepare the required documentation
If you determine that you need an export license for your goods, you should submit an export license application.
Before starting your application, you need to know what is expected during the application process.
Here are the key details you should expect to provide when applying for an export license:
· Product information including ECCN, destination, value, end use, and end-user
· Supporting documents including end-user statements, technical specifications, and description letters
#3 Apply for the license
You can apply for an export license online through the Simplified Network Application Process Redesign (SNAP-R) system. During the application, you will be required to
· Register with the Bureau of Industry and Security (BIS)
· Obtain your Company Identification Number (CIN)
· Provide the details you prepared in step 2.
#4 Wait for approval
BIS can request more information. They can also approve or deny your application after reviewing it. You should expect feedback within 30-60 days.
5 Common Types of Export Licenses
Here are the five key categories of export licensing:
#1 Encryption Licensing Arrangement (ELA)
The Encryption License Arrangement (ELA) is an agreement to authorise unlimited quantities of encrypted technology or commodities for reexports, exports, or transfers.
It applies to products within “more sensitive government end users” intended to meet specific end-uses and in specific sales territories.
#2 Technology Licenses
Technology licenses are required to export controlled technical data, information, or software that may have military or dual-use applications.
The license captures the designs, specifications, user requirements, source code, and every other detail about the intended use.
These licenses are often needed when sharing technical information with foreign entities, including collaborative research and joint ventures, or training programs.
#3 Individual Validated License (IVL)
An Individual Validated License is an export license issued for exporting controlled items or technology to a single end user.
This license is usually required when dealing with end users who are subject to heightened scrutiny, such as comprehensive trade embargoes or individuals associated with potential security risks.
The permit details the end user, intended end use, technical specifications and destination country.
#4 Deemed Exports for Encryption Technology and Source Code
Deemed exports refer to the release or transfer of controlled technology or information to foreign persons or entities within the borders of the exporting country.
With encryption technology and source code, even providing access to foreign nationals within a company or research institution can be considered a “deemed export” and may require an export license.
This regulation is particularly relevant in technology sharing within multinational organisations and research collaborations.
#5 DSP-5 Export License
The DSP-5 (Permanent Export License) is an export license issued by the U.S. Department of State under the International Traffic in Arms Regulations (ITAR).
This license is required when permanently exporting unclassified items such as defence articles and services, including military hardware, technology, and related data.
DSP-5 licenses are essential for companies involved in the defence industry and other activities that deal with sensitive military-related items.
Why Work with an Export Licensing Expert?
From determining whether your product needs an export license to approval, obtaining an export license can be complex.
Besides, export licensing requirements demand continuous monitoring for compliance as they keep changing. Most importantly, businesses need to be made aware that failure to meet the export licensing requirements can lead to penalties, loss, or detainment of goods.
Hence, working with experienced export licensing consultants can help alleviate the complexities of applying for an export license and ensure the timely delivery of exported products. It also helps your business comply with changing export licensing requirements.
Blackthorne’s dedicated export licensing team are well-versed in the latest encryption standards for hardware and software products that are shipped to countries governed by licensing regulations. This is their speciality, so get in touch and prevent this from happening with your tech shipments today!
