BIS Discusses EAR Compliance Measurement, HTS-ECCN Correlation, Etc.
At the Bureau of Industry and Security’s recent Annual Export Controls Update Conference, BIS officials discussed a variety of export compliance-related topics, highlight of which include:
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BIS Continues its EAR Compliance Measurement Program
BIS’ Office of Technology Evaluation implemented an EAR Compliance Measurement program in 2006. In this program, BIS reviews export transactions subject to the Export Administration Regulations (EAR) and reported through the Automated Export System (AES).
Through the compliance measurement program, BIS determines a quarterly percentage rate of exporter compliance.
(See ITT’s Online Archives or 09/01/10 news, 10090114, for BP summary of remarks by BIS Under Secretary Hirschorn in which he mentioned that BIS would be closely scrutinizing AES transactions to ensure that exporters are complying with the EAR.)
BIS to Expand Compliance Measurement to Include NLR Shipments
Although BIS has been looking only at export shipments subject to BIS licensing requirements, it will be expanding the compliance measurement to include No License Required (NLR) exports as well.
Most Recent Measurement Indicated 99% Compliance
The EAR Compliance measurement program began in 2006 with a 84.8% compliance rate. The progressively higher compliance goals (e.g., 87% in FY 2008 and 95% in FY 2009) set by BIS have been met or exceeded by the export community. BIS’ FY 2010 compliance goal is 99% and data for the first quarter indicates that this goal has been met.
Most Errors are Inadvertent, Only Most Egregious Referred for Enforcement
According to BIS, most of the errors identified in the compliance measurement appear to be inadvertent mistakes and indicate areas where additional education is needed or where additional AES edits and validations may be useful.
BIS notes that only the most egregious cases are referred for enforcement.
BIS' compliance measurement allows it to: (i) help BIS' Office of Export Enforcement (OEE) focus on most egregious violations; (ii) increase exporter compliance; and (iii) provide OEE with data to be used in interactions with foreign governments.
BIS’ Outlines Next Compliance Steps
According to BIS, the next steps for BIS in its efforts to improve EAR compliance include:
Cautionary letters. BIS has started sending out “cautionary letters” regarding reporting errors it finds. Officials stress that these are not “warning” letters and are used mainly to address various inadvertent errors such license country mismatch with AES country, inadvertent no license required designations, and license ECCN mismatch with AES ECCN.
Feasibility of creating HTS to ECCN correlation. BIS will be working with Census over the next year to examine the feasibility of creating a Harmonized Tariff Schedule (HTS) to Export Control Classification Number (ECCN) correlation.
A preliminary analysis indicates that while 48 of the 99 HTS chapters have a high correlation to ECCNs, the remaining HTS chapters have hardly any correlation to ECCNs.
Best practices to prevent transshipment diversion. Another recent compliance effort by BIS has been the publication of a notice of inquiry seeking public comments on a proposed updated list of “best practices” for industry regarding the transit, transshipment, and reexport of dual-use items. Comments are due by October 18, 2010.
(See ITT’s Online Archives or 09/01/10 news, 10090120, for BP summary of BIS’ notice of inquiry.)
Copy of Export Compliance Interagency Forum presentation available by emailing documents@brokerpower.com.