EAR99 Isn't a Free Pass for Export Compliance

One of my favorite aspects of working with our customers is hearing about their export processes and learning better ways to get export-related tasks done. However, there are some instances when I hear things that make me cringe.

This is especially true when I’m talking to people about export compliance. Too often I hear: “We don’t have to worry about compliance because our items are EAR99.”

Facepalm.

EAR99 doesn’t mean your export compliance worries are done!

Look, I understand where the confusion comes from. EAR99 is one of the most widely misunderstood classifications in the Export Administration Regulations (EAR). The name itself sounds harmless—almost like a "does not apply" category. But EAR99 is not a "license-free" status. It does not mean your compliance work is finished. And it definitely does not mean you can ship whatever you want, wherever you want, to whomever you want.

Because so many exporters search for "EAR99" hoping it means fewer rules, misunderstandings are common.

In reality, EAR99 is just one piece of a much larger export compliance puzzle. And depending on where you're shipping, who will receive it, and how it will be used, even EAR99 products may require an export license.

Understanding Export Controls: A Quick Primer

Before we dive into what EAR99 really means, it's important to understand that U.S. export control rules aren't governed by a single agency. Instead, three major regulatory systems come into play:

• Foreign Trade Regulations (FTR): maintained by the Census Bureau
• Export Administration Regulations (EAR): maintained and enforced by the Bureau of Industry and Security (BIS), part of the Department of Commerce
• International Traffic in Arms Regulations (ITAR): maintained and enforced by the Directorate of Defense Trade Control (DDTC), part of the Department of State

Depending on what you're exporting—goods, software, technology or even training—one or more of these regulations may apply. Other agencies' regulations, such as those published by the Department of Energy, also govern certain categories of sensitive exports.

For most exporters, there are six basic steps to follow to ensure compliance:

1. Properly classify your products.
2. Determine if the destination country requires an export license.
3. Screen all parties in your export transaction.
4. Watch for Red Flags: know how your product will be used.
5. Be aware of deemed exports.
6. Document your compliance efforts.

As you can see, determining if your items are classified EAR99 fulfills Step 1, but there are five more steps to follow!

EAR99 In Plain English (and Why It's Not a Free Pass)

If your product is subject to the EAR and after reviewing the Commerce Control List (CCL) you determine that it is not specifically described by an Export Control Classification Number (ECCN), you can classify it as EAR99.

EAR99 simply means: Your item is subject to the EAR but is not listed on the CCL.

Common Myths about EAR99

Myth 1: EAR99 means “license-free.”
Reality: It means “not listed on the CCL.” License requirements can still apply.

Myth 2: EAR99 items are too low-tech to care about.
Reality: Many low-tech items have been used in weapons, surveillance and military applications.

Myth 3: EAR99 protects you from penalties.
Reality: Violations involving EAR99 items routinely result in fines and enforcement actions.

Myth 4: EAR99 overrides sanctions.
Reality: Sanctions always override classification.

It does not mean:

• No license is ever required.
• I can stop doing compliance checks.
• I'm immune from penalties.
• The government doesn't care about this shipment.

Under the EAR, even EAR99 items are still subject to the General Prohibitions—particularly those involving end use, end user and embargoed destinations (General Prohibitions 4 through 10; 15 CFR Part 736).

In most low-risk situations, EAR99 items can be shipped using the NLR (No License Required) designation. But several factors can instantly change that.

When EAR99 Still Requires a License

Once you understand what EAR99 is—and what it isn't—the next question becomes obvious: When does an EAR99 item still require a license?

1. Embargoed or Sanctioned Destinations

The U.S. maintains comprehensive embargoes against:

• Cuba
• Iran
• North Korea
• Syria

In addition, the U.S. imposes sectoral, territorial and industry-specific restrictions on:

• Russia
• Belarus
• Crimea, Donetsk and Luhansk regions of Ukraine

Most of these restrictions apply regardless of whether the item is EAR99.

This is where many exporters get caught. Recent geopolitical events, such as the sweeping export controls on Russia and Belarus, illustrate how even EAR99 items can become restricted overnight. Controls may include expanded license requirements, industry sector sanctions, Military End User restrictions and Foreign Direct Product Rule expansions.

2. Prohibited End Users

You cannot ship to entities on restricted lists, including:

• OFAC's Specially Designated Nationals (SDN) List
• BIS Entity List
• BIS Military End User (MEU) List
• DDTC Debarred List
• Numerous other U.S. and other international lists.

If a party appears on a prohibited list, EAR99 does not mean you can still automatically export to them.

This is why restricted party screening (RPS) is a foundational compliance activity—even for EAR99 shipments.

3. Prohibited or Questionable End Uses

Under 15 CFR Part 744, BIS prohibits or restricts transactions involving:

• Nuclear weapons
• Missile technology
• Chemical or biological weapons
• Military or intelligence end uses in certain countries

Even items as simple as cables, switches, tubing, adhesives or batteries can end up being used in prohibited applications.

The Office of Export Enforcement often uses the example of a South African company that ordered a suspiciously large number of medical imaging switches, which were ultimately intended for improvised explosive devices (IEDs). The U.S. manufacturer spotted the red flags and alerted authorities.

The lesson is clear: end use matters as much as classification.

Restricted Party Screening: Still Required for EAR99 Exports

Screening parties in your export transactions is one of the simplest and most important compliance steps, yet it's too often overlooked.

There are basic approaches:

1. Manually Check the Lists

Possible? Yes. Practical? No. There are hundreds of lists and they change frequently, sometimes daily.

2. Using the ITA's Consolidated Screening List (CSL)

This is a useful starting point, but it includes only a subset of lists published by Commerce, State, Treasury and other agencies. It omits:

• Certain OFAC lists
• State-level lists
• International organization lists, such as the United Nations and European Union
• Country-specific lists

Not only does the CSL not include some important U.S. lists, updates may lag during extraordinary circumstances, such as U.S. government shutdowns.

EAR99 exporters still need comprehensive screening to stay safe.

3. Using Restricted Party Screening Software

Shipping Solutions Restricted Party Screening software screens your exports against more than 300 U.S. and international lists and is updated daily as lists change. Available as a stand-alone web-based tool or built into the Shipping Solutions Professional and Shipping Solutions Enterprise export documentation and compliance software, it allows exporters to quickly check all the lists and find matches based on company and organization names, people's names and entity addresses.

You can see how the Shipping Solutions software can help your company stay compliant by requesting a free online demo of the software. There's no obligation.

Or, watch how the standalone Restricted Party Screening Software works in this video:

Watch for Red Flags: Know Your Customer

BIS defines red flags as "any abnormal circumstances" suggesting an export may be destined for an inappropriate use, user or destination.

BIS has identified some red flag indicators, but keep in mind there is no single, complete list of red flags:

• The buyer is reluctant to explain the end use.
• The buyer's business doesn't match the product's technical level.
• The customer wants to pay cash for something expensive.
• A freight forwarder is listed as the final destination.
• The shipping route or packing is unusual.
• The buyer becomes evasive when asked questions.

Red flags require enhanced due diligence, not a quick shrug.

Creating an Export Compliance Program

Given all the variables—destination, end user, end use, sanctions, technology transfer, documentation—it's no surprise that successful exporters rely on a written Export Compliance Program (ECP).

A strong ECP:

• Helps employees follow consistent company procedures.
• Reduces the risk of missing a required check.
• Demonstrates to regulators that a company is doing its due diligence.
• Serves as an employee training and onboarding tool.
• Can significantly mitigate penalties if violations occur.

Your ECP should outline your company's processes for classification, licensing, screening, auditing, escalation and recordkeeping.

The Bottom Line: EAR99 Isn't a Shortcut

EAR99 doesn't eliminate your compliance responsibilities. It doesn't override sanctions. And it won't protect you if you accidentally (or intentionally) ship to a prohibited end user or end use.

Instead, EAR99 should be seen as Step 1 in the compliance process—not Step 6.

And the good news? When you put strong procedures in place, and use tools that simplify compliance checks, staying compliant becomes faster, easier and far less stressful.

Shipping Solutions export documentation and compliance software helps your company more efficiently create accurate export documents and stay compliant with export regulations. If you're ready to see how it works, you can request a free demo at any time.

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This article was first published in March 2016 and has been updated to include current information, links and formatting.