When Export “Classification Determinations” do not Determine Anything At All

Aug 03, 2010   

In the August 2, 2010 edition of the Federal Register, the Bureau of Industry and Security (BIS) “ the Department of Commerces group in charge of export regulation in that department “ issued an interim final rule in which it says that exporters cannot rely on BISs classification determinations as “U.S. Government determinations.”

This seemingly convoluted bit of government semantics is designed to more effectively communicate to exporters what BIS has been saying for years:  Commerce isnt the only federal department or agency enforcing regulations.  In fact, BIS only has jurisdiction over those items and activities that are subject to the Export Administration Regulations (EAR).”  Therefore, when merchandise being exported falls clearly and solely under BIS jurisdiction, then its classification determinations are as good as gold.

But what happens when merchandise being exported falls under the jurisdiction of State Department’s Directorate of Defense Trade Controls (DDTC), or Treasurys Office of Foreign Assets Controls, or the Department of Energy or Nuclear Regulatory Commission?  Too often in the past, exporters have turned to BIS to pass judgment on products that arent “subject to the EAR.”  In those instances, exporters must comply with the regulations administered by the applicable agency, and exporters dont have to consider the provisions of the EAR.

So what are exporters supposed to do?  Government regulations state that an exporter should review relevant government regulations and make “jurisdictional determinations” as to which department or agency has primacy with respect to regulating a product.  In practice “ and when in doubt “ we encourage exporters to seek advisory opinions from BIS and the State Department as to the proper classification of merchandise.  When contacting the DDTC, exporters should request a “commodity jurisdiction” determination to ascertain an item is subject to the International Traffic in Arms Regulations (ITAR).

Armed with this self-determination of which agency or department has possible jurisdiction over a product, and (potentially) an ITAR determination and a BIS determination as to a commoditys possible Export Control Classification Number (ECCN), an exporter can move forward with reasonable certainty.

But what about that BIS classification in light of the interim final rule?  Exporters need only remember that because BIS does not have authority to issue determinations that would bind other agencies, a BIS commodity classification only identifies whether the merchandise being exported is described in the Commerce Control List (based on the ECCN).  Exporters still need to do their due diligence with other agencies to ensure export compliance.