U.S. Export Restrictions: What Are They and How Do They Work?

The U.S. government imposes restrictions on the export of a number of items it considers to pose potential threats to national security or vital economic interests, including weapons, technology, technical data, and even assistance and technical training. Most restrictions apply to specific items that have actual or potential military applications or that the U.S. government believes could harm the country’s economic interests.

Key Points

The U.S. government imposes numerous restrictions on the export of a wide range of items that it considers may pose a threat to national security or vital economic interests. Most restricted items include weapons and advanced technology, but rules also apply to technical data and even providing assistance or training to non-U.S. citizens. U.S. export restrictions also target specific countries, organizations, and even individuals. This complex set of rules is managed by a variety of different agencies, each with its own lists and often its own policies and procedures. Exporters must check the item and destination against at least two different agencies’ information interests.

What Items Are Subject to U.S. Export Controls?

U.S. export controls are complex and managed by several agencies, depending on the exported item, destination, and intended purpose of use. There is a long list of specific items that are subject to export controls and require a license. The U.S. Department of Commerce, Bureau of Industry and Security (BIS), classifies items needing an export license using Export Control Classification Numbers (ECCNs), which are listed in the Commerce Control List (CCL). If an item is subject to export controls but not listed in the Commerce Control List, it is classified as EAR99. EAR99 items do not require an export license. However, even ordinary consumer goods require an export license if they are headed to a prohibited country or to certain organizations or individuals, or if they will be used for prohibited purposes (see below).

Where Are Items Exported To?

In addition to the long list of items that are subject to export controls, there are several specific requirements for each country, so exporters should review both the ECCN and the country chart from the Department of Commerce to ensure that the item can be exported and that it can be exported to the specified country, organization, or individual.

Who Receives the Export?

U.S. exporters are not allowed to ship anything to organizations listed on the U.S. government’s Entity List.

What Is the End Use?

The United States also restricts the export of items that will be used for any purpose prohibited by U.S. law. These items may require a license or may not be allowed to be exported at all. Prohibited items are listed in the export administration regulations. For example, the export of a technological piece typically used for non-harmful purposes may be prohibited if the end use will violate U.S. law, such as conducting surveillance illegally within the United States or creating the potential for human rights abuses.

U.S. Agencies Enforcing Export Controls

As outlined, there is a wide array of laws that restrict the export of specific items from the United States, and these laws are managed by many federal agencies, depending on what is being exported and to where.

Here are the main federal agencies that manage export controls:

• The Bureau of Industry and Security (BIS) within the U.S. Department of Commerce administers the Export Administration Regulations (EAR). The EAR regulations apply to the export of commercial and dual-use goods, software, and certain specific encryption algorithms. The BIS also controls the export of arms, including parts and components that may be used by foreign military forces.
• Part of the BIS, the U.S. Export Administration (USEA) reviews license applications for export, re-export, transfers, and deemed exports (the transfer of technology to foreigners in the U.S.) that are subject to the EAR.
• Manages

The Directorate of Defense Trade Controls (DDTC) at the U.S. Department of State regulates the International Traffic in Arms Regulations (ITAR). ITAR regulates the export of arms and military services as well as technical data that can be used for military purposes.

• The Office of Foreign Assets Control (OFAC) at the U.S. Department of the Treasury restricts the export of certain goods and services to specific countries. OFAC particularly manages economic and trade sanctions. These sanctions can be comprehensive and restrict nearly all transactions and exports to or from specific countries, organizations, or individuals.
• The Foreign Trade Division in the U.S. Census Bureau (FTD) manages rules on how to provide export information to the U.S. government. The division specifically administers Electronic Export Information (EEI) that most exporters must submit to the U.S. government. The U.S. Census Bureau shares this export data with the BIS, OFAC, DDTC, U.S. Customs and Border Protection, and other regulatory and law enforcement agencies to ensure that exports comply with a wide range of U.S. export restrictions enforced by these agencies.

Recent Developments

In the fall of 2022, the United States imposed its most stringent export restrictions on China to date, targeting its access to advanced chip technology, with the goal of restricting its capabilities in supercomputing and artificial intelligence. The U.S. government also announced a review of the definition of “national security” in the context of export restrictions, leading to discussions with allies about expanding the restrictions beyond traditional lists.

However, these restrictions may be ineffective unless they are adopted by other major semiconductor-producing countries, which have so far been reluctant to do so. Some technology companies outside the U.S. may fill the gap by continuing to engage with China, particularly those in Europe, South Korea, and Japan. But in early 2023, Japanese and Dutch authorities, after some initial opposition, announced that they would join the U.S. in restricting technologies used in the semiconductor industry that could be exported to China, particularly from Dutch company ASML and Japanese company Nikon, both of which have developed such technologies.

Throughout the rest of 2023, the United States intends to continue using export controls to protect its national security, focusing on semiconductor technology, advanced computing, quantum computing, artificial intelligence, biotechnology, clean energy, and human rights protections.

What is the Bureau of Industry and Security (BIS) at the U.S. Department of Commerce?

The Bureau of Industry and Security (BIS) at the U.S. Department of Commerce administers the Export Administration Regulations (EAR). The EAR regulations apply to the export of commercial and dual-use goods, software, and certain specified encryption algorithms. The BIS also controls the export of munitions, including parts and components that foreign armed forces may use.

What is the U.S. Export Administration?

The U.S. Export Administration (EA) within BIS reviews license applications for exports, reexports, transfers, and deemed exports (the transfer of technology to foreign persons in the U.S.) that are subject to EAR. The administration was created under the Export Administration Act of 1979 to implement a variety of U.S. export control policies.

What is the Directorate of Defense Trade Controls (DDTC) at the U.S. Department of State?

The Directorate of Defense Trade Controls (DDTC) at the U.S. Department of State administers the International Traffic in Arms Regulations (ITAR). ITAR regulates the export of arms and military services as well as technical data that can be used for military purposes.

Conclusion

The U.S. government imposes several restrictions on the export of a wide range of items that it considers potentially threatening to national security or vital economic interests of the country. These restrictions primarily include weapons and advanced technology but can also encompass information such as technical data and even providing technical assistance.
Source: https://www.investopedia.com/u-s-export-restrictions-6753407