USML vs. ECCN: What's the Difference?

Wishing something were true doesn’t make it true.

That simple fact came into focus for me during one of the Bureau of Industry and Security (BIS) export control seminars held around the country. A BIS licensing officer shared a story that stuck with me because it highlights a mistake exporters still make today.

A company representative called BIS seeking advice on how to classify the company’s products. As the conversation continued, it became clear the caller hoped their products would fall under the jurisdiction of the Commerce Department's Bureau of Industry and Security rather than the State Department's Directorate of Defense Trade Controls (DDTC).

Why?

Because they wanted an Export Control Classification Number (ECCN) under the Export Administration Regulations (EAR) instead of controls under the International Traffic in Arms Regulations (ITAR).

The BIS employee explained that wanting a particular classification was fine—if it was accurate. But wishing for an ECCN does not make it true.

After the call, the licensing officer visited the company’s website and quickly saw the problem. The products were clearly designed for military use. They belonged under ITAR and likely fell under the U.S. Munitions List (USML). Apparently the caller forgot that BIS employees also have internet access.

The lesson is simple: export classifications are based on facts, not preferences. And getting them wrong can create serious problems.

Why Proper Export Classifications Matter

Classifying products incorrectly creates problems. Sometimes those problems are minor. Sometimes they are expensive.

At the very least, a bad classification can delay shipments while someone asks additional questions or requests documentation. It can create confusion between your company, your freight forwarder and your customers. If the problem isn't caught early, it can work its way into your export procedures and create issues for future transactions.

More serious mistakes can attract government attention and potentially lead to civil penalties, criminal penalties or denial of export privileges.

None of this means exporters should panic. But classification is one of those foundational compliance steps where getting the answer wrong can create consequences far beyond a single shipment.

First Question: Is Your Product Subject to ITAR or EAR?

Many exporters frame the question as USML vs. ECCN. That makes sense, but technically that is not where the analysis begins. The first question is:

Is your product subject to ITAR or EAR?

That distinction matters because USML and ECCNs are not direct equivalents. Products subject to ITAR are generally controlled under the U.S. Munitions List. Products subject to the EAR may receive an ECCN—or they may be classified as EAR99. Determining jurisdiction first makes everything else easier.

Start by Reviewing the U.S. Munitions List

When many people think about export controls, they picture weapons systems, military equipment and classified technology.

Sometimes they are right.

ITAR exists to regulate products, technologies and services that could affect U.S. military capabilities or national security interests. The U.S. Munitions List identifies defense articles, defense services and related technical data specifically designed, developed, configured, adapted or modified for military or intelligence applications.

Examples can include:

• firearms and weapons systems
• military aircraft components
• targeting systems and fire control equipment
• night vision systems
• military electronics
• certain spacecraft technologies
• technical data related to defense articles

If your products fall under the USML, DDTC generally has jurisdiction. In that case, you need to register with DDTC, and an export license will most likely be required before shipping.

Does Selling to the Military Automatically Mean ITAR Applies?

Not always—but this is where many exporters become confused.

Some exporters assume that if the customer is a military organization, the product automatically falls under ITAR. Sometimes that turns out to be true. Sometimes it doesn't. The customer alone does not determine jurisdiction.

Some products sit in a gray area between purely military and purely commercial applications. Advances in technology have also blurred the line. For example, ruggedized laptops, communications equipment, industrial sensors and navigation technologies may be purchased by military organizations while still remaining subject to the Export Administration Regulations rather than ITAR.

The question usually isn't: "Who is buying the product?"

Instead ask: "What was this product designed to do, and how does the government regulate it?"

That question usually gets exporters closer to the right answer.

If It Isn't USML, Review the Commerce Control List

If your products are not controlled under ITAR, they may fall under the Export Administration Regulations administered by BIS. The Commerce Control List includes products with both commercial and military applications—often called dual-use items.

Examples may include:

• telecommunications equipment
• encryption software
• sensors
• computers
• manufacturing equipment
• navigation systems
• certain technologies and software

Many of these products do not look particularly sensitive. That is one reason exporters become confused. People hear terms like export controls and military applications and imagine missiles or fighter aircraft. But dual-use products can be ordinary-looking items with technical capabilities that trigger export controls.

Where Does EAR99 Fit?

One of the most common comments I hear from newer exporters sounds something like this:

"We're not exporting anything dangerous, so our products must be EAR99."

I understand where that thinking comes from. Many people assume that unless they are shipping weapons or military hardware, export controls probably do not apply. But many controlled products under the EAR do not look dangerous at all. Products such as encryption software, advanced electronics, machine tools and sensors can receive ECCNs because of their technical characteristics—even though they may have completely legitimate commercial uses.

If a product subject to the EAR does not appear on the Commerce Control List, it may instead be classified as EAR99. EAR99 often applies to lower-risk commercial products. But EAR99 does not mean "no export controls apply."

Destination, end user, end use and sanctions restrictions can still create licensing requirements. I've seen exporters become comfortable with an EAR99 classification and stop asking questions. That can create problems later.

Need Help Determining Your Product Classification?

Sometimes the answer is obvious. Sometimes it isn't. Small differences in specifications, performance thresholds or design intent can completely change a classification.

If you're unsure, you have several options. Many exporters begin by reviewing the Commerce Control List and USML and making an internal determination. If uncertainty remains, BIS allows exporters to submit a Commodity Classification request through the SNAP-R system and request a formal CCATS determination.

If the question is whether an item belongs under ITAR or EAR jurisdiction, exporters can submit a Commodity Jurisdiction request through DDTC.

And for companies classifying large numbers of products—or simply trying to create more consistency across departments—software can help. Shipping Solutions Product Classification Software helps exporters correctly identify USML and ECCN classifications, as well as HS, HTS and Schedule B numbers. (Give it a try for free.)

Asking questions before shipping products is almost always easier—and much less expensive—than fixing mistakes later.

Final Thoughts

Most products exported from the United States fall under EAR jurisdiction and many do not require export licenses. But assumptions create risk.

Whether your products receive an ECCN, fall under EAR99 or belong on the USML, exporters remain responsible for getting the classification right.

If you want a deeper explanation of export licensing requirements, download our free guide: How to Determine If You Need an Export License.

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