Export control

Classification

Goods may be classified using a various classification systems. The United States uses the Export Control Classification Number (ECCN),^[5] India uses the Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) list^[6] and Japan uses Ministry of Economy, Trade and Industry (METI) lists.^[7]

Some items may be categorised as "designed or modified for military use", some as dual use, and some will not be export controlled.^[8] Dual use means that the device has both a civilian and a military purpose.^[9]

In several jurisdictions, classifications distinguish between goods, equipment, materials, software and technology; the last two being often considered intangible. Classifications may also be by destination purpose, including cryptography, laser, sonar and torture equipment.

Destination

An exporting country will consider the impact of its export control policy on its relationships with other countries. Sometimes countries will have trade agreements or arrangements with a group of other countries, which may specify that licences are not required for certain goods. For example, within the EU, licences are not required for shipping civilian goods to other member states;^[10] however, licences are required for restricted, military goods.^[11]

The exporting country's legislation will demand certain handling for goods in different classifications to destination countries. This could include:

• The destination is barred from receiving the goods. This could be because of economic sanctions, or because the export would be against the interests of the country, or for other reasons for example because of human rights concerns. Exports of that class of goods to that destination is not be permitted.
• Shipping the goods may require licences from the government. The government has legislation that requires certain items to be scrutinised, perhaps because of the item type, perhaps because of the destination, so there is opportunity for decision making based on policies. While some policies are published, the fine-grained detail may be subject to national security restrictions and based on intelligence. A goal of the legislation is to push exports that are close to the threshold through scrutiny, so a decision can be made by the exporter's government based on unpublished or partially-published criteria.
  The outcome of a licence application could be:
  • No licence required - the consideration of the exported item versus the destination was not controlled. This could even be while some jurisdictions request scrutiny for particular items, or for particular destinations
  • Licence granted - the government has concluded that the shipment will not significantly harm national interests, partner nations' interests, human rights, or other criteria
  • Licence denied - the government concludes that this shipment is contrary to national interests etc.
• The export of the items is without concern, with and that class of goods can be shipped without impediment from export control legislation.

The end user of the goods or some broker will typically be declared, and similar restrictions apply as to countries.

Some individuals or entities may be listed, so that even if the item could normally be exported to the country without a licence, additional restrictions apply for that individual or entity.^[12]

Licence

For any given item being exported, the categorisations will typically lead to different treatments for a given destination, e.g. 'No Licence Required' (NLR) or 'Licence Required'.^[8]

If a licence is required for the item, to the destination, the licence issuer will require information as part of the licence application, typically including:

• name, address, business number (e.g. EORI ) of the exporter
• technical details of the exported item, possibly including product documentation, part numbers and likely uses
• value of the item and quantity to be shipped. This can be difficult to assess with intangibles (i.e. software or technology)
• actual purpose of the item, often with a declaration to this effect from the intended recipient, and assurances that the items will not be used elsewhere.
• shipment route, consignee addresses, brokers, agents and other involved third parties.

The declaration from end user could be an End User Undertaking (EUU),^[13] an End User Statement (EUS)^[14] or an End-user certificate. These EUUs will typically include intended use, and make assurances as to the applications for the goods, e.g. not to be used within missiles.

Licences can subsequently be obtained from the appropriate government department in the exporter's jurisdiction.

A licence will usually have some terms, such as:

• obtain and keep EUUs from every destination organisation. (Applies to open-type licences; standard-type licences may require submission of the EUU at the time of licence application.)
• include the licence number with the shipping documentation
• include some text with the documentation accompanying the item
• notify some authorities and make the item available for inspection prior to shipment
• keep a records of the shipment, and anticipate a potential audit by an enforcement agency — a record keeping requirement
• report the shipments made to some authority within some period — a reporting requirement.

Administration and enforcement

The process of classification, assessment, licensing, and then confirming the compliance with the licence terms is typically handled by government agency in the exporting country. These include BAFA (The Federal Office of Economics and Export Control) in Germany,^[15] BIS (and E2C2) in US, ECJU in UK.

Organisations for harmonisation of controlled items

These are known as Multilateral export control regimes

• Australia Group (AG)
• Chemical Weapons Convention (CWC)
• Missile Technology Control Regime (MTCR)
• Nuclear Suppliers Group (NSG)
• Wassenaar Arrangement (WA)
• Zangger Committee

The regimes mean that supporting nations will tend to have similar classifications in their individual legislation. It reduces the administrative load on each of the nations. The harmonised regimes reduce the opportunity for 'tourism' where a particular country is chosen for its lax controls pertaining to some particular item. Even with the harmonised regimes, some countries choose to augment with additional classification, e.g. the USA with its 'xx99x' ECCN classifications in their Commerce Control List.^[17]