Export Compliance is a dire necessity for international business transactions. Many Small & Medium Enterprises ignore the importance of adhering to their home-based nation’s export compliance regulations. Sometimes this is out of ignorance and other times out of negligence. Either way, the real costs (i.e., penalties, fines, product docking and “blacklisting”) that can occur from noncompliance are too high to ignore. Utilizing freight forwarders or other third-party services for export compliance needs does NOT remove a company from its liability.  It is a must to know what issues are paramount for export compliance, in specific, what a business needs to do to ensure that its products, technology and or services are 100% export compliant.

Fortunately, most countries and export regulatory organizations have their export regulations readily available on dedicated sites. While detailed and at times complex, the issues, rules, forms, and licenses required for specific products, technology and countries are readily available on allocated government sites.

The World Customs Organization (WCO) utilizes what is called HS codes (International Harmonized System) to classify exporting items. The International Convention on the Harmonized Commodity Description and Coding System governs the WCO. You must have a six-digit HS code when you are exporting.  In general, the first two digits refer to the product type and the second two refer to a further categorization of a product. For example, 09 is the code for coffee, tea, mate, and spices, while 0901 further classifies the product into coffee-roasted or not, decaffeinated; coffee husks.  Further numbers in the HS code serve to extend the product classification.

It is essential to utilize the correct HS code for your product and to know the Harmonized Tariff Schedule (HTS) (applicable to US exporters). Wrongly coded products can incur legal liabilities which include financial penalties, seizure of products and the costs of recovery and border entry delays, to name just a  few “penalties.”

The EU (European Union) and the United States have excellent online resources for export compliance adherence. Below is an overview of the resources available for the EU and the US.

Please note, this is not meant to be a comprehensive source of issues or information regarding export compliance but rather an introduction to the fundamental concerns and tools available in the EU and the US.

European Union (EU) Export Compliance issues, for the most part, are standard for all countries within the European Communion. Imports into the EU that are then transported from nation to nation within the EU need only pass customs in one port of entry in conformity with the appropriate rules of origin. The European Union free trade zone also encompasses the right of free transit throughout the EU as well as the EEA (European Economic Area).  As you will note, in the official Europa.eu site, while free transit is applicable, nation-specific rules may apply to your particular service or product. The European Union has a comprehensive EU Trade Helpdesk that can help you designate import rules, tariffs and requirements within the EU on a country by country basis.

In the United States, not all products require an export license. However, there tend to be more severe export issues and penalties for US-based companies than for non-US entities. Ignorance is not Bliss if you are US company-Seller Beware!

A few governmental agencies that regulate exports, and are the most direct source for information regarding export compliance include:

1) Bureau of Industry and Security: administers Export Administration Regulations (EAR).
2) US State Department: administers the International Traffic in Arms Regulations (ITAR). It designates the items in this category that require an export license.
3) Office of Foreign Assets Control (OFAC): within the US Department of Treasury enforces economic and trade sanctions and provides a comprehensive denied parties list on its website (see OFAC).

You must always seek qualified advice at all times and, fortunately, the US government’s sites and portals provide up to date information. Also, many professional services are available to assist with your US export compliance.

As part of your Export Strategy, take the time to create a written Compliance Plan.

Remember, Even If You Utilize Expert Advise, Export Services of Any Kind- You & Your Business Alone Are Responsible for Any Export Non-Compliance Issues.  

SELLER BEWARE!