What are the Export Administration Regulations (EAR)
The government of United States supervises defense-related foreign policy interests through two sets of export control regulations issued by the U.S Department of State and the U.S. Department of Commerce.
The set of regulations controlled by the U.S Department of State is known as the International Traffic in Arms Regulations (ITAR). The ITAR controls all commodities specifically regarded as defense articles, and services for military applications, listed under the United States Munitions List (USML).
Depending on the national threat issues, the USML is subject to change. However, all items and services are not covered under the USML. There are a few goods and services that fall under another set of regulations known as the Export Administration Regulations (EAR), issued by the U.S. Department of Commerce, Bureau of Industry & Security (BIS).
The control of EAR is based on the technical complexity of goods and services, the involved user, the actual purpose of goods and services, and the intention of use of goods and services in the export country.
EAR regulates the export of defense items meant for dual purposes. They control goods and services with potential military applications, exported predominantly for commercial purposes. These specific items subjected to export control laws under the EAR are clubbed under the Commerce Control List (CCL).
The CCL is divided into ten categories. Few of these categories of dual-items include nuclear materials, materials processing, telecommunications and information security and marine.
Any U.S. manufacturer, exporter or distributor dealing with the export of the items falling under the CCL requires a specific license from the U.S. Commerce Department. All items on the CCL have a specific Export Control Classification Number (ECCN).
Additionally, there may be a few items that are not identified on the CCL. These items are classified into the ‘basket’ category. The ‘basket category’ is a part of ‘EAR 99’ and includes common goods, such as automobiles.
Items listed in the EAR 99 generally may not require a prior license from the U.S Department of Commerce, except for export to specific countries or individuals.
The Export Administration Regulations – EAR, also takes care of ‘deemed’ exports and re-exports. Deemed export refers to the release or transmission of technical data by a company’s personnel or representative to a foreign national in the United States. Any shipment or transfer of technical data from one foreign country to another is called as re-export under the EAR.
The Bureau of Industry and Security (BIS), which overlooks the EAR, monitors and helps several businesses to determine essential documents and certificates necessary for their exports. BIS is also responsible for informing exporters and distributors about any changes made to the EAR policies. The BIS can issue severe civil as well as criminal penalties to businesses in case of non-compliance with the EAR policies. For rigorous EAR violations, BIS can issue a maximum penalty of $250,000.
Compliance with ITAR and EAR policies can be challenging because of technological data transfer and usage of the Internet. BIS believes that it is the responsibility of the exporter, manufacturer or distributor to take required steps to obtain compliance certification in line with their export regulations.
You may also go to our FIRRMA page for more information concerning international investment and monetary transactions.