2012-06-30 US Exporters need to recognise the importance of De Minimis rules
June 30, 2012 Category: Breaking export compliance news, Exportadvicers.com ECCDK 1 Comment 
US Exporters need to recognise the importance of “de minimis” rules for non-US manufacturers integrating US components into foreign technology abroad. The most likely consequence of ignoring the de minimis rules is that non-US manufacturers will design out US components.
While many US exporters recognise the need to service customers regarding US export control rules, there are still many US companies failing to do so.
US exporters recognising and working the US de minimis rules – applicable worldwide to anyone utilising controlled US technology – will undoubtedly increase sales/exports. The reason is simple: Non-US manufacturers outside the US often do not have the resources to closely study US export control legislation in such detail that they understand and feel comfortable with these laws. When US exporters openly and immediately informs of ECCN numbers and available License Exceptions including variations of License Exceptions such as ENC Restricted versus ENC Unrestricted or retail versus mass market, foreign importers feel comfortable and assured that they will not violate any extraterritorial US export control laws.
US exporters ignoring the US de minimis rules will be designed out of non US productions simply because, it is the most cost-effective thing to do when alternative components are available on the market.
The existence of US export control laws is definitely becoming more and more recognised outside the US but the applicability of the rules is both discussed and disputed by many. Quite significant resources may be required for foreign manufacturers in assuring compliance with US export control laws, which leads a number of non-US manufacturers to actively design out US components.
Over the years, I have personally met numerous US manufacturers failing to inform about ECCN numbers and a few of these were quite unwilling to inform about ECCNs and the equally important information regarding applicable license exceptions – when requested to do so. It is time-comsuming, it is costly, and it is too risky for non-US manufacturers to deal with such companies.
The above is not criticism of the average US manufacturer. Many US companies work with the customers regarding US export laws. It is a call for the ignorant companies to wake up – otherwise, Asian, African, European and South American manufacturers will take your business from you.
Have you visited the ECCDK ECCN Database or the ECCDK Export Compliance FAQ?
Try one of the export control quizzes and see if you can score a full 100 points. The quizzes are available here and here.
- ECCDK
The comments, observations, and need to focus on numerous United States regulatory elements are of value, should others elect to read them. A further comment, frequently a United States Corporation will invest in a foreign organization as a means of adding some controls to a key supplier. What is frequently overlooked and perhaps intentionally omitted is that when the US corporation has secured a certain amount of the stock in the foreign corporation the relationship changes and the organization outside the United States, formerly operating without any concern over US regulations, will now find itself to be fully under the controls of the United States Government in all aspects of their enterprise. What was an acceptable commercial program yesterday, perhaps will need US export licenses today for the self same sales, simply due to the purchase of a controlling minority of the shares in the foreign firm. It is just not the products themselves, but the entire organization that must now comply with Federal Regulations.