Commerce Department to Expand Filing and ECCN Requirements for CCL Items Exported to China, Russia, and Venezuela

Key Points

• On April 28, 2020, BIS issued a final rule expanding filing requirements for EEI in the Automated Export System, among other changes to the EAR announced that day and discussed further in our alert published on April 30, 2020. This rule will come into effect on June 29, 2020.
• Currently, EEI filings are generally required for shipments where a license is required, or where the value of the shipment exceeds $2,500. In addition, where the item being exported is described on the CCL under an ECCN controlled only for Anti-Terrorism reasons, the exporter is not required to identify the precise ECCN. These are rules of general applicability and are not unique to China, Russia, or Venezuela.
• The new rule, which comes into effect on June 29, 2020, will amend the EAR to require an EEI filing for all tangible exports of items described on the CCL when destined to China, Russia, or Venezuela regardless of value, unless the export may be made under license exception GOV (which allows exports and reexports for U.S. government agencies or personnel, agencies of cooperating governments, and some enumerated international efforts). In addition, even if such exports include only items controlled for AT-reasons, the exporter is required to identify the precise ECCN.
• Notably, this new requirement does not include EAR99 items, which will not require EEI filings for exports to these destinations under this rule. Accordingly, while this rule will substantially increase the number of shipments to China, Russia, or Venezuela that require EEI as well as the burden on exporters to property furnish ECCN information, it remains the case that the vast majority of shipments to these countries will continue to be exempt from the EEI requirement.

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On April 28, 2020, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) published a final rule that expands Electronic Export Information (EEI) filing requirements for exporters. The change was released as part of a broader amendment that expands the Export Administration Regulations (EAR) license requirements on the export, reexport, and transfer of items subject to the EAR to military end users and military end uses in China, Russia, and Venezuela (for Akin Gump’s detailed analysis of that rule change, please see here). The final rule will become effective June 29, 2020 and, among other changes, will require export jurisdiction and classification information for many shipments of tangible items to China, Russia, and Venezuela for which such information is not currently required.

Background

Subject to certain exceptions, the EAR require exporters to complete EEI filings in the online Automated Export System (AES) platform for certain tangible exports from the United States. EEI filings collect information from exporters regarding export transactions, including names and addresses of parties, the description, quantity, and value of the items, and additional information that may be required depending on the circumstances, such as Export Control Classification Numbers (ECCNs). Exceptions to the EEI filing requirement are described in the EAR and the Foreign Trade Regulations¹ (FTR), both administered by the Department of Commerce, and some exports may be exempt from filing if they fall under certain EAR license exceptions.²

Currently, for exports that do not require an export license, exporters are exempt from providing ECCN information when the items are controlled for anti-terrorism (AT) reasons only. Exporters are also generally exempt from making EEI filings for shipments valued under $2,500.³

Expanded EEI Requirements

Under the new rule effective June 29, 2020 amending 15 C.F.R. §758.1, exporters will be required to make EEI filings for all exports of tangible items described on the Commerce Control List (CCL) when destined for China, Russia, or Venezuela, regardless of value, unless the export may be made under license exception GOV.⁴ License exception GOV authorizes exports and reexports for international nuclear safeguards, U.S. government agencies or personnel, agencies of cooperating governments, international inspections under the Chemical Weapons Convention, and the International Space Station. This new EEI filing requirement will only apply if the items are included on the CCL, which means it does not include items designated under the ECCN “EAR99,” which describes items subject to the EAR (e.g., located or manufactured in the United States) but not described on the CCL. However, items designated EAR99 will continue to require an EEI filing if a license is required (such as shipments to a restricted end-use or end-user), or if their value exceeds $2,500.

In addition, for shipments of items described on the CCL to China, Russia, and Venezuela for which no export license is otherwise required, the new rule will require exporters to enter accurate ECCN information for the items in those transactions, regardless of the reason for control.

Impact for Exporters & Freight Forwarders

Parties that make shipments of tangible items from the United States to China, Russia, and Venezuela should ensure they understand the EEI filing process and should also be prepared to obtain or determine accurate export jurisdiction and classification information for those items prior to export. In many cases, this will likely require the exporter to either collect ECCN information from a manufacturer or supplier, or to conduct its own jurisdiction and classification analyses on the items in their shipments to determine whether the items are described on the CCL and, if so, what the accurate ECCN is for those items. Although the rule change will not introduce a new EEI filing requirement for exports of EAR99 items to China, Russia, or Venezuela, exporters should be confident in those classification determinations before choosing not to make an EEI filing on that basis. Failure to file EEI, or filing incorrect information, would be considered a violation of both the EAR and the FTR and could lead to a U.S. government enforcement action. Discovery of such violations may place a company in a position to disclose to both BIS and the Census Bureau (which administers the FTR).

Many exporters rely on freight forwarders or other third-party logistics providers to make EEI filings on their behalf. Freight forwarders and other third-party logistics providers need to ensure their procedures are updated in order to request the proper information from their shippers. Similarly, exporters must consider that they are likely the principal party in interest for most export transactions, and thus the party primarily responsible for the accuracy of information filed on their behalf, even if the filing is made by a third party. As such, freight forwarders and other third-party logistics providers will likely rely on the information supplied by their customers and assume its accuracy.

Contact Information

If you have questions about these changes or how to comply with the new rules, please contact:

¹ 15 C.F.R. Part 30.

² 15 C.F.R. §758.1(c).

³ 15 C.F.R. §758.1(b)(5).

⁴ 15 C.F.R. §758.1(c)(4).