If you unknowingly add a cup of salt to your cake batter instead of sugar, your cake isn’t going to win any prizes, even if your subsequent ingredients are perfectly portioned.
EAR Export Control Classification Number (ECCN) classification is similar; if at some point you make a mistake and don’t catch it, your end result is a violation, regardless of how compliant the rest of your export processes are.
Adhere to these best practices to achieve prize-worthy classifications:
1. Stick to the Order of Review. The Bureau of Industry and Security (BIS) website’s Decision Tree is invaluable if used properly. If your item or technology is controlled, your first step is to determine if your jurisdiction falls under the Export Administration Regulations (EAR) or the International Traffic in Arms Regulations (ITAR) so you can go on to classify correctly. For EAR commodities the Decision Tree will walk you through General Prohibitions, Reasons for Control, and questions regarding licensing requirements. References to the EAR Regulations help you correctly proceed to each step, ending with submitting a license application if need be.
2. Resist living on the edge. If you currently classify transaction-by-transaction, you’re taking potentially regrettable risks. Finding out you require a license just as your product is about to ship, or making determinations based solely on shipping deadlines are not conditions conducive to compliance. Classify all your current items and technology, and review the Commerce Control List (CCL) and the United States Munitions List (USML) to see how your future commodities fit in. The result? Simpler classifications going forward and the foundation of good training for new employees.
3. Stay current. One thing you can count on for sure…is that you can’t count on your ECCN classifications being valid forever. Just when you think you’ve got a handle on your commodities, government regulations change and suddenly you need to re-classify. Acquire a system that delivers government updates as they are published, and install a timely follow-up process for updating your records.
4. Don’t let good talent go to waste. Employees with detailed knowledge about the design, materials and end-use of your products are ideal as classification experts. Many engineers and technology developers support their company’s compliance staff with their experience and know-how.
5. Insist on Consistency. ECCN Classification policies and processes should be fully documented, with your classification team properly trained to follow them. Rationale must be consistent company-wide or you’re inviting chaos. Employee ‘A’ can’t decide an item needs a license while Employee ‘B’ decides the same item can ship without. Ongoing staff development, performance reviews and procedural manuals are some ways to ensure everyone is doing the same thing, the same way, with the same result.
6. Secure your valuables. Since your ECCN classification information is so vital to keeping your business running, its value must be considered when considering how to store it. Careless filing and poor organization of spreadsheets can lead to losing records, needlessly duplicating work between departments, or making errors that jeopardize your compliance, so be meticulous in your record-keeping and insist on uniformity (see #5). Another option is an automated system. This will consolidate your data so it’s easily accessible (and sharable, so that everyone across divisions and sub-divisions is on the same page), with the added bonus of a detailed audit record being there when you need it!
7. Pick Your Tools Carefully. The BIS website’s resources enable self-classification of items that fall under the EAR. It’s a labor intensive process with room for human error, but the information is current and accurate. As an alternative, software solutions are available that will save you countless hours by helping you quickly find ECCNs, simultaneously cross-reference the USML and CCL, and easily determine license requirements and exceptions – leading to enhanced accuracy, efficiency and employee happiness. Be sure to carefully assess your company’s needs and resources before deciding on the classification method that’s right for you.
Solid compliance demands accurate ECCN classification. How many of these practices are you currently following?