Getting to Known EAR Reporting Requirements

Ready for an Export Administration Regulations quiz? Each of these scenarios has one thing in common. Do you know what it is?

1. An export of police radios classified 5A002.a.1 to the United Kingdom for end-use by the Greater Manchester Police and authorized by License Exception ENC.
2. The No License Required shipment of a thermal imaging camera controlled by ECCN 6A003.b.4.b from the United States to Estonia.
3. A licensed export of a computer controlled by ECCN 4A003.b to Israel.
4. An export permitted by License Exception LVS of ceramic-ceramic composite materials classified 1C007.c to Costa Rica.

Widely varying commodities. Export Control Classification Numbers drawn from various Commerce Control List categories. Destinations across the globe. One export is licensed, one does not require a license and two others qualify for exceptions.

So what is the connection?

The answer: Every one of these situations requires the exporter to submit a report to the Bureau of Industry and Security. The EAR is replete with reporting and notification requirements, each of which has its own item and country scope, usually along with exceptions to both. The mandated content of the reports and procedures for their submission also varies from requirement to requirement. Most of these rules can be found in Part 743 “Special Reporting and Notification,” but others are sprinkled elsewhere in the regulations.

The reporting obligations highlighted in the examples above cover, respectively:

1. Encryption (§740.17(e)(1)): Exports (and reexports from Canada) of certain encryption commodities, software and technology classified in ECCNs 5A002, 5B002, 5D002 and 5E002. Most exports of items classified in these ECCNs do not need to be reported, but some do. This report is required semi-annually and may be submitted by email (to BIS as well as NSA) or by sending a disk or CD to BIS. There are other encryption-related reporting requirements, including an annual self-classification report (§742.15(c)) and a report for key length increases in existing products (§740.17(e)(2)).
2.  Thermal Imaging Cameras (§743.3): BIS added a reporting requirement for certain thermal imaging cameras in 2009 when the agency removed most export license requirements on some (not all) cameras controlled by ECCN 6A003.b.4.b. This is also a semi-annual report, with the EAR specifying submission via email. If the camera has a serial number, the exporter must include that detail in their report.
3. High Performance Computers (§743.2): The EAR contains a longstanding post-shipment verification reporting requirement for high performance computer exports, as mandated by Congress in the late 90s. Reports must include several specific pieces of information including the carrier, air waybill or bill of lading number and, again, serial numbers. And sorry, cheapskates, but BIS notes here that it “will not accept reports sent C.O.D.”
4. Wassenaar Arrangement (§743.1): To meet its commitments under this multinational export control regime, the US Government must notify the other members of the group of some exports from the US to non-Wassenaar states (a list of members is Supplement No. 1 to Part 743). At first glance, this semiannual reporting requirement appears rather broad, but upon closer examination it is subject to so many limitations that it rarely applies. It is relevant just to exports under certain license exceptions and other, less common authorizations (i.e. Special Comprehensive Licenses, Validated End-User). Most notably, only exports of items on the Wassenaar Sensitive List (reproduced in Supplement No. 6 to part 774) must be reported. The Sensitive List is a small subset of the CCL. For example, of all 51 pages of Category 3, only one subparagraph of one hardware ECCN, 3A002.g.1, and related software and technology controls. That’s right; I am looking at you space-qualified atomic frequency standards. No C.O.D. allowed here either, but if you still have a fax machine, BIS welcomes you to use it (don’t forget to dust it off first).

These are just some of the EAR’s reporting requirements. There are many other occasions in which exporters (and, less frequently, reexporters) may be obliged to submit reports, notifications or other filings with BIS. Is a failure to fulfill these requirements likely to result in a swift charging letter from your friendly local Office of Export Enforcement agent? Not likely. Although there have been a handful of instances of companies charged with failure to report violations, these were all in the context of more serious charges of unlicensed exports.

Short of eliminating these reports altogether, is there anything BIS could do to reduce their burden on exporters? I have two ideas. First, BIS could harmonize the rules for the content and submission procedures of the reports, which today vary significantly. Second, the agency should exempt from reporting exports which already require filings in the Automated Export System.