What you need to understand about export trade compliance

Contract manufacturers have seen an increasing trend due to the fact that they are able to reduce capital expenditures, cut supply costs, and aid in building flexibility into your companies production process. Contract manufacturers do have a lot of great benefits but since many of them are overseas you need to research the trade compliance regulations in order to ensure that you are able to use the items. This is commonly an issues when dealing with importation of things like weaponry whether that is guns or even knives. You must follow the compliance requirements or it can spell disaster for your organization.

What needs to be done initially is to find out which jurisdiction the products fall under. Are they part of ITAR or EAR. Understanding who the target audience will also help in determining the jurisdiction as not all products are going to just fall to a particular jurisdiction. It also helps to understand if the items are used in defense needs, telecommunication, or satellite programs. The more you are able to define the product, the easier it will be for you to help the jurisdiction understand the end use.

When you are dealing with ITAR your items are normally part of the U.S. Munitions List. This will include weaponry items such as ammunition and other things. Typically ITAR is mostly involved with government affiliated programs and services. Equipment for the military members such as protective gear is also part of ITAR. Even guidance control and optical control equipment will fall under ITAR even if they aren't being sold to the military and are used for commercial purposes.

A contract manufacturer will need to disclose all of this information in order to allow for the right paperwork to be processed and for the equipment to be manufactured and shipped. The USML is very particular about the products that are designed and which category they can be used under. Some of them are simply parts and components for cars and other devices but it needs to be properly defined in order for it to be produced and distributed. It is also necessary for advanced testing to be done in order to meet USML quality control standards. Initially you will need to submit your basic information like the blueprints and other plans about the equipment for USML to approve it.

The EAR jurisdiction is a little different with compliance standards. You will have most of the items falling under the software, commodities, and technology sector compared to that of the ITAR system. The Department of Commerce will have some control over the EAR jurisdiction along with the Commerce control list (CCL). The CCL will be available to have control over certain items and to ensure that the products are under the correct jurisdiction.

Both jurisdictions are very different and this does mean that contract manufacturers must be under the right jurisdiction for the products to not only be approved for production but to then move onto the actual manufacturing phase and then to distribution. It is a good idea to meet with your Department of State to learn more about contract manufacturing export trade compliance and to register for it. You will also need to apply for multiple licenses with the USML and along with foreign transfer licenses.

The Commerce Country Chart does require that you register with them if you are planning to export items that fall under the jurisdiction of EAR. Not only does the product and organization need a license, individuals must also get a license to transfer products to a foreign person. There is more information pertaining to the licensing procedures in the user agreement with your state department.