Assigning an Export Control Classification Number (ECCN) to each item subject to the Export Administration Regulations (EAR) which your company plans to export is a fundamental task that every export professional must master. Establishing the proper ECCN also is an essential prerequisite to determining if a license is needed from the Department of Commerce to ship the item overseas.
Many export professionals find the process of assigning an ECCN to a product to be both rigorous and confusing. There are 600 pages of entries in the Commerce Control List (CCL) devoted to ECCNs, so the task of finding the right ECCN for a new item can seem overwhelming.
The following Q&As can help you better understand the importance of ECCNs and how to assign them.
What is an ECCN?
An ECCN is a five-character, alpha-numeric designation on the CCL used to identify items for export control purposes. The ECCN categorizes items based on the nature of the product, such as the type of commodity, technology, or software and its inherent technical parameters. The ECCN, in combination with the Commerce Country Chart, allows an exporter to determine whether the item is subject to a list-based export license requirement.
ECCNs are contained in the CCL, which is Supplement No. 1 to Part 774 of the EAR. The taxonomy used to create ECCNs is divided into ten broad categories and each category is sub-divided into five product groups, with further drill-down to specific numbered entries.
For example, assigning ECCN 9A610 – Military Aircraft and Related Commodities (other than those enumerated in 9A991.a) indicates the following:
- The “9” refers to Category 9 – Aerospace and Propulsion.
- The “A” refers to the product category of Equipment, Assemblies, and Components.
- The third numeric character, “6,” indicates the general type of controls applicable to the item, in this case that this is a “600 series” military item.
- The remaining two numeric characters, “10,” places the ECCN in the numerical order.
Why do I need to assign an ECCN to an item?
Until you go through the process of designating an ECCN, you have no way of knowing whether or not an export license is required. We at the Export Compliance Training Institute strongly recommend that companies and organizations classify all items subject to export with ECCNs, including software source code and technology that may be accessed domestically by foreign nationals. Exporting without a required license may make your company liable for fines and other penalties.
How do I determine an export classification for my item?
There are several methods you can use to assign an ECCN to an item for export:
- You can self-classify the item. This requires a technical understanding of your item and the familiarity with the structure and format of the CCL. The CCL Order of Review at Supplement No. 4 to Part 774 of the EAR details how you can begin by undertaking an “order of review” for the item to make your ECCN determination:
- Compare the characteristics of your item to the ten CCL categories.
- Determine which product group applies to your item.
- Check the 600 series or 9X515 ECCNs, both of which supersede other ECCNs. See if there is a paragraph that describes the item which does not use the term “specially designed.”
- Check if the item is in a 600-series or 9X515 catch-all paragraph that indicates it is a “specially designed” item:
- Is it caught by “specially designed” in paragraph (a)? or
- Is it released by “specially designed” in paragraph (b)?
- If the item is not in a 600-series or 9X515 ECCN, then search the rest of the CCL for an accurate description of the item, beginning with ECCNs which do not use the term “specially designed,” followed by ECCNs which do use that phrase.
- If the item does not match with any ECCN classification, then it should be assigned EAR99.
- If your item is truly unusual, if you are unsure which ECCN should be assigned, or perhaps if a customer wants official confirmation, you can ask BIS to classify an item using the Simplified Network Application Process – Redesign (SNAP-R) This approach will still require you to review the ECCN to find likely categories for your item and you must provide various documentation about the item as part of the request.
What if my item doesn’t fit any of the ECCNs on the CCL?
If, after a careful review of the CCL, your item does not fit any parameters of any ECCN, you may designate it as EAR99. This “bucket” category can be used if the item is not described by any ECCN. In general, EAR99 items do not require an export license and thus may be exported “No License Required” if the following criteria are met:
- The item is not being exported to a sanctioned destination.
- The item is not being exported to a denied person, sanctioned entity, or prohibited end-user.
- The item will not be used for a specific end use that is subject to more stringent controls.
- No other EAR-based license requirement applies.
I’m a distributor. Do I need to assign ECCNs to the items I export?
If the item you plan to export is something you obtained from another entity such as a vendor, that company should provide you with an ECCN. If they haven’t done the work of classification or if they don’t provide the number, you are ultimately responsible if you export the item and you may be liable for any penalties. So, if no ECCN has been assigned by the vendor, it’s best for you to go through the process and classify the item.
What are the consequences if I don’t get the ECCN right?
There are no penalties per se for getting the ECCN wrong. However, exporting an item without a license, or exporting to restricted countries due to ECCN misclassification, can result in civil penalties under the EAR for violations. The maximum civil penalty is in excess of $300,000 per violation. Often, if a misclassification has been found, the problem may be systemic and the company can be liable for multiple violations at a steep cost.
What if I have additional questions?
Refer to the EAR for complete details, especially the CCL. Additionally, you can contact the Outreach and Educational Services Division of the BIS at (202) 482-4811 or the Western Regional Office at (949) 660-0144. The BIS can provide guidance and answer questions over the phone, but it can only provide definitive classifications for ECCNs by using the SNAP-R form.
ECTI offers extensive live seminars, e-seminars, and on-demand training on EAR and ITAR classification. We make it easy for you to be up-to-date and knowledgeable about the critical export regulation requirements and current changes that can impact your business. Check out our latest tools & resources here.
If you have questions about how best to keep track of ongoing changes to export regulations that may affect your company’s export activities, ECTI is the place to start. We can help you easily stay current with changes to export regulations. Visit www.learnexportcompliance.com to learn about our company, our faculty, our staff and our esteemed Export Compliance Professional (ECoP®) certification program. To find upcoming e-seminars, live seminars, and live webinars and to browse our catalog of 80-plus on-demand webinars, visit our ECTI Academy. You also can call the Export Compliance Training Institute at 540-433-3977 for more information.
Scott Gearity is President of ECTI, Inc.