Classification Determinations

Overview

The first step to understanding if your product or service could be subject to the International Traffic in Arms Regulations (ITAR) or the Export Administration Regulations (EAR) is to ascertain an accurate classification. Without a classification, not only will you have a weak compliance program but chances of a violation occurring are greater. A classification is needed in order to properly identify and document items being exported. Consequences for violating the EAR or the ITAR can be subject to criminal and civil prosecution, carry stiff penalties, and other sanctions such as loss of export privileges or incarceration. Penalties are assessed on a per violation basis.

Understanding how to interpret the regulations and find whether your product or service is on the Commerce Control List (CCL) or the U.S. Munitions List (USML) can be a daunting task. There are three ways a classification can be achieved:

1
Obtaining classification from the manufacturer / vendor
The manufacturer of a product understands the original design intent (ODI) and thus is the best resource for obtaining the classification of the product. Even if a manufacturer does not sell their product to customers outside of the United States, the manufacturer should still have classification of their products to understand if there are potential deemed export concerns. Additionally, if the product or service is listed in the USML or CCL, the manufacturer or exporter must register with the U.S. Department of State's Directorate of Defense Trade Controls (DDTC).
2
Self−Classify
Self−classifying is when you review the USML and CCL to make a determination directly. This process is more than just reviewing the USML and CCL, it also requires a thorough understanding of the ITAR and EAR to comprehend the breadth of the regulations and apply the necessary controls to maintain compliance. There are some who have taken the approach to treat products "as−if" they are subject to the ITAR. The problem with this style of management is that if there is a violation it must be handled like an ITAR item; it cannot be claimed after the fact that it was not ITAR−controlled. Additionally, if you treat products "as−if" they are ITAR−controlled but they really are subject to the EAR, an unnecessary burden is put on all parties involved. Submitting a Commodity Jurisdiction (CJ) request is used to determine whether an item or service is subject to the jurisdiction of the U.S. Department of State.
3
Obtain determination from the U.S. Departments of State or Commerce
The CJ procedure is used when there is doubt to an article being covered under the USML. A Commodity Classification request from Bureau of Industry and Security (BIS) is a formal classification determination and will include the Export Control Classification Number (ECCN) for the item if it is applicable. It is not as simple as submitting a request to in essence say, "hey what's the classification for my item." Whether submitting a CJ or CC, the request must accompany the technical details related to the item. It is not uncommon to have an agent from the DDTC or BIS reach out for additional information, thus the more information and details that are included in the request the better. It is important to note that a CJ or CC is not a license or authorization to export an item, it is only to identify the proper licensing authority for the referenced product or service.