The phrase “subject to the EAR” is so ubiquitous to exporters that its meaning sometimes gets lost – especially in organizations where export compliance is a part-time role.

Here’s an overview of what “subject to the EAR” means, and why the Export Administration Regulations (EAR) apply to the vast majority of exports from the U.S. – as well as to many transactions outside the U.S.

Overview of export controls

Most things that get exported are subject to some level of export control regulation, and most are subject to the EAR, which is administered by the Bureau of Industry and Security (BIS) within the Department of Commerce. But the EAR is just one of a few sets of rules that govern exports and related activities.

Some of the other agencies that maintain export controls are:

These agencies get first say on whether an item comes under their exclusive jurisdiction. If none of them claim authority over an item, then by default the item is subject to the EAR.

A pie chart of the controlling authority for U.S. exports looks something like this:

It illustrates why it’s tempting to assume any export is subject to the EAR – even though that’s not necessarily the case. Some items aren’t controlled at all; a list of items which convey information, including books, periodicals, hydrographical charts, atlases, globes, and other such things are explicitly excluded. But most items are subject to the EAR – though the controls vary greatly from extremely restrictive to minimal.

Another common misconception is that items subject to the EAR don’t require an export license. While that’s true for roughly 95 percent of all items exported from the U.S., BIS still processes about 40,000 license applications each year.

So, the main challenge of the EAR is identifying the needle in a haystack when there IS a license requirement. Some companies exporting highly controlled items deal with the question all the time, and they develop a core competency in the necessary research. For others, the search is an occasional challenge.

For U.S. based businesses

For businesses based in the United States, determining whether an item is subject to the EAR, and if so its classification, is essentially a process of elimination.

Step 1: It begins with looking at the ITAR and other possible regulators. If the item can’t be found within the jurisdictional scope of their export controls, and is not otherwise carved out of the EAR, then it’s probably safe to assume the item is subject to the EAR.

Step 2: Use the Commerce Control List (CCL) to figure out the item’s Export Control Classification Number (ECCN). If the product doesn’t have an ECCN, it’s still subject to the EAR and gets classified EAR99.

Step 3: Apply the appropriate EAR controls based largely on the classification of the item and the destination. End use, end user, and other factors may also be relevant in determining license requirements.

For businesses outside the United States

There are three ways companies outside the United States may also be subject to U.S. reexport regulations.

  1. U.S.-origin items: When a foreign entity buys an item of U.S. origin, and then ships or transmits it to a third country.
  2. De minimis rule: When an item made outside the United States incorporates a proportion of certain types of content of U.S. origin.
  3. Foreign Direct Product (FDP) rule: When certain items are made outside the United States using specified software, technology or equipment from the United States, and are destined for particular countries or parties.

A complex piece of equipment could be subject to any or all of these conditions; as an example, consider a commercial airliner built by Airbus, containing numerous systems and components from the United States.

So, for non-U.S. businesses, the analysis whether something is subject to the EAR is important – and it can get complicated.

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De minimis rule

The de miminis rule establishes how U.S. export controls apply to foreign-made items based on the amount of controlled U.S.-origin content they contain. BIS defines U.S.-origin controlled content as anything which requires a license when exported to the country where the foreign-made item will end up being used. In its most basic form, it says:

  • Foreign-made items that incorporate more than 25 percent controlled content are subject to the EAR when reexported anywhere in the world.
  • Foreign-made items incorporating more than 10 percent but no more than 25 percent controlled content are only considered subject to the EAR when sent to a country in Country Groups E:1 or E:2 (currently Cuba, Iran, North Korea, and Syria).
  • Foreign-made items containing any controlled content classified in military (600 series) or space (9×515) ECCNs are subject to the EAR if intended for locations under arms embargo, designated by BIS as Country Group D:5.

Calculating the percentage of U.S.-origin controlled content is a nuanced process outlined in  EAR 734.4 and Supplement No. 2 to Part 734.

Foreign Direct Product Rule

A decades-old EAR concept, expanded in recent years to target both Chinese telecom giant Huawei and Russia, this rule makes foreign-made items subject to the EAR if they’re produced using certain U.S.-origin technology, software, or equipment – even if they don’t actually contain U.S.-origin content.

Once highly obscure and now only slightly less so, the rule has six flavors – each with the potential to render foreign-origin items subject to the EAR, and potential license requirements.

  1. the National Security FDP rule
  2. the 9X515 FDP rule
  3. the 600 series FDP rule
  4. the Entity List FDP rule
  5. Russia/Belarus FDP rule
  6. Russia/Belarus-Military End User FDP rule

Other considerations

For many entities, especially U.S. companies and their foreign affiliates, the Treasury Department’s Office of Foreign Assets Control places a layer of regulation on top of the EAR for exports, transactions, and other activities involving countries, entities or individuals under sanction. So, after determining whether an item is subject to the EAR, understanding OFAC sanctions programs is critical to understanding additional restrictions on an item based on its destination.

Export rules are changing all the time – and often take effect the same day they’re published. So it’s important to monitor changes and stay updated.

The official source for keeping track of the changes is the Federal Register, which is searchable and easy to use. Users can subscribe to receive email alerts based on specific areas of interest, such as “EAR” and “BIS”.

As a secondary source, BIS also offers email subscriptions for regulatory updates – though many of these are duplicated from the Federal Register anyway.

Contact the Export Compliance Training Institute

Do you have questions about export compliance and the EAR? Visit to learn about our company, our faculty, our staff and our esteemed Export Compliance Professional (ECoP®) certification program. To find upcoming e-seminarslive seminars and live webinars and browse our catalog of 80-plus on-demand webinarsvisit our ECTI Academy. You can also call the Export Compliance Training Institute at 540-433-3977 for more information.

Scott Gearity is President of ECTI, Inc.