Business Law

Exporting and Your Small Business

If you are operating a small business which manufactures consumer goods, one way to increase the sale of your goods is to export them to companies located in countries other than the United States. The foreign companies can then sell the goods to their customers. If this is successful, your business can produce more of those goods. This can be a profitable venture for your business; however, before you try to export your goods, you should become acquainted with the federal laws and regulations which control exports.

Export Administration Regulations

The most comprehensive U.S. export control program consists of the Export Administration Regulations (EAR). The items governed by the EAR are those for civilian use and those often referred to as "dual use" items; that is, items that serve in military and proliferation applications as well as commercial applications. The EAR specifically applies to:

  • Commodities, software and technology (called items) and
  • Certain activities, such as contributing to the proliferation of weapons

The purpose of the EAR is to serve the national security, foreign policy, nonproliferation and short supply interests of the United States and, in some cases, to carry out its international obligations. Exports are restricted by item, country and recipient entity.

In order to export your goods, you should consult the EAR and follow the Steps for Using the EAR. You must assume four responsibilities:

  1. Determine if the item or activity comes within the scope of the EAR, based on the item or country to which the item is being exported
  2. If the item comes within the scope of the EAR, determine what controls are applicable by checking the general prohibitions contained in the EAR
  3. Apply for any necessary export license if no exception applies
  4. Retain your records, as required

Persons who fail to comply with these responsibilities may be subject to enforcement proceedings.


The EAR has ten general prohibitions, which set forth the requirements for all exports, re-exports, and activities subject to the EAR. The following five types of facts determine the obligations under these prohibitions:

  1. Classification of the product
  2. Country to which the goods are exported or re-exported
  3. Ultimate end-user
  4. Ultimate end-use
  5. Conduct of the person

The general prohibitions forbid such things as:

  • Exports or re-exports of controlled goods to controlled destinations without a license or license exception
  • Re-exports of foreign-made items containing U.S. parts and/or components that incorporate more than de minimis U.S. controlled content
  • Exports or re-exports of foreign-made items made with U.S. technology or software for export to specified countries
  • Exports or re-exports to prohibited end users
  • U.S. persons from engaging in any activity supporting proliferation or providing certain technical assistance for encryption items

If you need legal assistance in determining whether or not your goods are covered by the EAR or whether or not you need an export license, contact a small business lawyer who is familiar with international trade issues.

Other Laws

Exporters have to comply with other federal laws and regulations, including:

  • The Trading with the Enemy Act and the International Emergency Economic Powers Act, which empower the U.S. President to prohibit transactions with specific foreign countries. The Treasury Department's Office of Foreign Assets Control is responsible for administering embargoes and economic sanctions imposed by the United States against foreign countries under these laws.
  • The Foreign Corrupt Practices Act, which prohibits U.S. companies and persons from making corrupt payments to foreign government officials in order to obtain or retain business
  • Antiboycott laws, which prohibit actions that comply with boycotts against countries friendly to the United States. Specifically, the United States forbids action in furtherance of the Arab boycott against Israel. U.S. antiboycott regulations are administered by the Department of Commerce Bureau of Export Administration and by the Department of the Treasury Internal Revenue Service.
  • Regulations by the U.S. Department of State on arms and military equipment. These articles and services are strictly controlled, and exporters must be registered with and have a license from that department.

Exporting Your Goods

After determining whether or not your exports are covered by the EAR or other federal laws or regulations, you might need some information on the export process or on potential trade opportunities. The U.S. Department of Commerce has lots of free information that you can access. For a small fee, you can obtain trade leads from the National Trade Data Base. Using these sources of information can help to decide how to proceed in exporting your goods.

Questions for Your Attorney

  • Do I need an export license to export clothing to England?
  • Do the Export Administration Regulations cover the shipment of new automobiles to Germany?
  • How can I bypass the U.S. embargo against Cuba?
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