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Mapping the Export Administration Regulations (US)

<div id="content"><p tabindex="0">Like most of the Member States of the European Union, the United States are signatory to the Wassenaar Arrangement. Their export control regimes are essentially laid down in the Export Administration Regulations (EAR).</p><div class="kalturaVideoLessonWrapper"><div aria-label="Structure of the EAR" class="kalturaVideoLessonContainer" data-testid="video" id="1_53bxjnz6"></div></div><div class="note"><div class="noteTitle"><span class="noteIcon"><img title="Note" src="/icons/note.svg"></span><span class="noteTitleText">Note</span></div><div class="noteBody">Within the meaning of the EAR, a prohibition does not necessarily ban a particular activity but establishes a license requirement.</div></div><p tabindex="0">Delivery Customizing for SAP GTS contains a legal regulation EAR that is activated for legal control at country level. As the configuration of this legal regulation would probably have to be adapted, it is best used as a template for a customer-specific legal regulation mapping the EAR.</p></div>

Structure of the Export Administration Regulations

<div id="content"><p tabindex="0">Except for defense articles, special nuclear materials, and a few more products, the EAR claim universality for "all U.S. origin items wherever located" (§ 734.3 of Part 734). This claim notably includes commodities classified under the CCL that have been incorporated into other commodities outside the United States, as well as foreign software or technology that is "bundled" or "commingled" with U.S. origin software or technology classified under the CCL. Items produced outside the United States by the use of classified U.S. origin technology or software ("direct products") are equally considered subject to the EAR.</p><p tabindex="0">Other countries may reject the claim to the extraterritorial application of national law. However, since many foreign companies have subsidiaries or do business with companies in the United States, they seek global compliance with the EAR to avert damages to their business and employees.</p><div class="kalturaVideoLessonWrapper"><div aria-label="Introduction to Reexport Control" class="kalturaVideoLessonContainer" data-testid="video" id="1_ov6nnogv"></div></div><p tabindex="0">Delivery Customizing for SAP GTS provides the legal regulation USREX for reexport control based on the EAR. The system uses this legal regulation to determine whether a product is subject to the EAR.</p><div class="kalturaVideoLessonWrapper"><div aria-label="Determination of Legal Regulations for Reexport" class="kalturaVideoLessonContainer" data-testid="video" id="1_p52xsbsx"></div></div><div class="note caution"><div class="noteTitle cautionTitle"><span class="noteIcon cautionIcon"><img title="Caution" src="/icons/caution.svg"></span><span class="noteTitleText">Caution</span></div><div class="noteBody">This summary only constitutes a simplified outline of reexport control based on the EAR. In case of doubt, you should read the relevant parts of the EAR or contact the BIS.</div></div></div>

Provisions for Reexport Control

How to Set Up Determination of Legal Regulations for Reexport Control

Configuring and Using Legal Control

Explore the similarities between US and EU export control regulations for dual-use items, delving into the Export Administration Regulations, Commerce Control List, and license exceptions. Understand the scope and nuances of compliance.<br><br># This description was auto-generated #

Structure_EAR.mp4

In the area of export control for arms and dual-use items, the United States have signed the same treaties and are member of the same groups as the Member States of the European Union. Their legislation establishing export control for dual-use items therefore is to a certain extent similar. This is especially true for the range of controlled items and their classification. Since 2018, the Export Control Reform Act is the legal basis of export control for dual-use items. The Export Administration Regulations, which are the focus of this lesson, contain provisions for the implementation of this Act. The Export Administration Regulations are issued by the Bureau of Industry and Security, an agency of the United States Department of Commerce. The Export Administration Regulations consist of 24 parts. The slide lists only the parts that are most important for Compliance Management in SAP GTS. The first three parts contain general information on the purpose, the scope, and the use of the Export Administration Regulations. Supplement No. 1 to Part 732, for example, provides a guide in the form of an "export control decision tree". Part 734 defines the crucial term "subject to the EAR" and the so-called de minimis rules for reexports, amongst other things. Part 774, the final part of the Export Administration Regulations, is the Commerce Control List, that is, the list of controlled items. Part 738 gives an overview of this list, including the reasons for control. Its supplement contains the Commerce Country Chart that is essential for the determination of licence requirements. Part 740 describes all license exceptions and the conditions for their application. You will learn more about license exceptions in the "Defining License Types" lesson of this learning journey. The scope of the Export Administration Regulations goes beyond export control for dual-use items. Part 736 lists ten General Prohibitions that must be reviewed to determine if a license is necessary, provided an export, reexport or activity is subject to the Export Administration Regulations. Only the first three General Prohibitions refer to dual-use items. The other prohibitions affect all items subject to the Export Administration Regulations unless otherwise specified. They describe activities that are not allowed without authorization from the Bureau of Industry and Security. The embargoes to which General Prohibition 6 refers are specified in Part 746. Like the list of dual-use items, the Commerce Control List is structured as stipulated in the Wassenaar Arrangement. It consists of ten categories. Each of the ten categories is subdivided into five classes. The codes for the dual-use items, referred to as Export Control Classification Numbers, consist of five characters, for example 2A101 for radial ball bearings. Parts 736 and 746 extend the scope of the control regime to all items subject to the Export Administration Regulations and to activities other than export or reexport. The General Prohibitions 4 to 7 basically establish sanctions against persons and countries. Prohibition 8 restricts transit shipments through certain countries. General Prohibitions 9 and 10 concern the violation of terms or conditions of a license or of a license exception. The fact that the scope of the Export Administration Regulations is not limited to export control for dual-use items, but equally comprises sanctions, has to be kept in mind when choosing the appropriate application area for mapping this legislation in SAP GTS.

<div>Learn about re-exports and the regulations surrounding them, including ECCNs, license requirements, and de minimis rules. Understand how US origin content impacts export control.<br><br># This description was auto-generated #</div>

Introduction to Reexport

The Export Administration Regulations define a reexport as an actual shipment or transmission of items subject to its control from one foreign country to another. Releasing technology or software to a foreign national outside the United States is also considered a reexport. Whenever a person in one country imports goods from the United States and supplies them to a person in another country, the goods are considered to be reexported regardless of whether they remain unchanged or are incorporated into another product. Exporters located outside the United States have to proceed essentially as if exporting the items directly from the United States. They must first check the Commerce Control List to identify the Export Control Classification Numbers (ECCNs) of the items. If an item is classified under an ECCN, the exporter has to find out whether the Export Administration Regulations establish a license requirement. Not every item outside the United States that incorporates components of US origin classified under an ECCN or that is produced using US origin software or technology classified under an ECCN is automatically subject to the Export Administration Regulations. Part 734 of the Export Administration Regulations provides two so-called de minimis rules applicable to the reexport of most of the items on the Commerce Control List. Each of these rules defines a percentage for the maximum value share of US origin content classified under one or several ECCNs. If this percentage is not exceeded, the foreign-made item is not subject to the Export Administration Regulations and therefore not relevant for reexport control. If it is exceeded, however, the exporter might be required to apply for a license from the BIS if there is no license exception available. In principle, the 10% de minimis rule applies to reexports to countries in Country Group E. The members of this group are Cuba, Iran, North Korea, Sudan, and Syria. The 25% rule applies to reexports to all other countries. However, foreign-made items incorporating US origin items classified under certain ECCNs are excluded from the application of the de minimis rules. They are therefore subject to the Export Administration Regulations regardless of the amount of US origin content.

Learn how SAP GTS determines legal regulations for export compliance management, including re-export control and license determination based on specific legal regulations.<br><br># This description was auto-generated #

Determination of Legal Regulations for Reexport

After successful replication of a sales order in the form of an export document, SAP GTS determines the legal regulations for the application areas within Compliance Management. If the system carries out reexport control in addition to export control, it determines at least two legal regulations for legal control: one legal regulation representing the export control legislation of the exporting country and a second legal regulation that it uses as a basis for the decision whether at least one item of the export document is subject to the Export Administration Regulations. If an item is indeed subject to the Export Administration Regulations, the system additionally determines the legal regulation representing the Export Administration Regulations. The subsequent license type and license determination is based on this legal regulation. The legal regulation representing the legislation of the country of departure is active only in the country of departure. The legal regulation acting as intermediary is active in all countries except the United States and the legal regulation representing the Export Administration Regulations is active in the United States, and only in the United States.

Learn about the legal regulation USREX and its implications for US re-export control, including the country groups involved and the activation process. Understand the changes in determination procedures for legal control.<br><br># This description was auto-generated #

Reexport_Legal_Regulations.mp4

The legal regulation USREX is provided in delivery Customizing together with two country groups, the critical and the non-critical countries for US reexport. The country group for the critical countries corresponds to Country Group E in Supplement No. 1 to Part 740 of the Export Administration Regulations. The country group for the non-critical countries comprises all other countries except the United States. In delivery Customizing, the legal regulation USREX is generally activated for all possible combinations of the two country groups. It is, however, not yet activated at application area level. Before it makes sense to activate the legal regulation for legal control, a change to the procedure for the determination of legal regulations is necessary. The determination rule preselected for the determination procedure LELDT provided delivery Customizing results in an exclusive access to the determination strategies assigned to the procedure. So, if the system determines a legal regulation based on strategy ALRG01, it ends the search. Only if the first access fails, the system makes a second attempt based on strategy ALRG03. As a consequence, legal control is always carried out based on exactly one legal regulation. For an additional reexport control, however, up to two more legal regulations are required. In the learning system, the determination procedure LELDT has therefore been replaced by the determination procedure ZLELC. In the settings of this procedure, the determination rule has been changed to enable the determination of more than one legal regulation for legal control. In the access sequence, the determination strategy ALRG13 for combinations of country groups is in second place just after the country-based determination strategy ALRG01. Finally, the determination procedure ZLELC has been assigned to the application area as a replacement for the procedure provided in delivery Customizing. The legal regulation USREX could now be activated for legal control to be determined in addition to the legal regulation for the national export control legislation of the respective country of departure. As a supply to a member of Country Group E is always an export, indicator 2 would be appropriate. If SAP GTS is used in a Member State of the European Union, indicator 3 would be most suitable for the second group because it covers dispatches, that is, intra-Union supplies, as well as exports from one non-critical country to another. In the unlikely event that SAP GTS is used in a member of Country Group E, these steps would have to be repeated with indicator 2 for both country groups. The control settings for legal regulation USREX are specific to its functions of being the basis for the decision whether an item is subject to the Export Administration Regulations. In the "Re-Export Checks" area, the "Re-Export" indicator is set. The system therefore knows that the legal regulation is only an intermediary and not itself the basis for license determination. If an item of an export document turns out to be subject to the Export Administration Regulations, the system passes the further processing onto the reference legal regulation that represents the Export Administration Regulations.