🇪🇺 EU Regulatory Update: EU Common Military List Updated
Marine boat
🇪🇺 EU Regulatory Update: COMMON MILITARY LIST OF THE EUROPEAN UNION Updated
The EU Council adopted on 24 February 2025 the new version (2025) of the EU Common Military List.
This list indicates, in 22 categories, ML1 to ML22, the equipment (hardware, software and technology) covered by Council Common Position 2008/944/CFSP defining common rules governing the control of exports of military technology and equipment.
The list of 25 February 2025 replaces the previous version of 19 February 2024. It will constitute the basis for a new version of the Annex to EU Directive 2009/43 on defence-related products, that will be published in the next 6-9 months.
Link to the new list: https://zurl.co/R7mrt
Understanding the Critical Differences: "EAR99", "ECCN None," and "Not Subject to the EAR"
EAR99. ECCN None. Not subject to EAR.
In the complex world of export compliance, seemingly similar classification terms can have significantly different implications. Three key designations that often cause confusion are EAR99, "ECCN None," and "Not Subject to the EAR." While they might appear interchangeable to the uninitiated, understanding their distinct meanings is crucial for proper export compliance. Let me clarify these important differences.
What is EAR99?
EAR99 is a positive classification category under the Export Administration Regulations (EAR) administered by the U.S. Bureau of Industry and Security (BIS). It serves as a "catch-all" designation for items that:
Are subject to the EAR
Are not listed on the Commerce Control List (CCL)
Have been properly evaluated and classified
EAR99 items generally consist of low-technology consumer goods that do not require a license for many destinations, except to embargoed countries, to denied parties, or for prohibited end-uses.
What is "ECCN None"?
An Export Control Classification Number (ECCN) is a five-character alphanumeric designation used in the Commerce Control List (CCL) to identify dual-use items (items with both commercial and military or proliferation applications) that are subject to U.S. export controls. If a product is not classified as EAR99, it must be assigned a specific ECCN.
ECCNs follow a structured format:
First digit: Category (0-9) 0: Nuclear Materials, Facilities and Equipment 1: Materials, Chemicals, Microorganisms, and Toxins 2: Materials Processing 3: Electronics 4: Computers 5: Telecommunications and Information Security 6: Sensors and Lasers 7: Navigation and Avionics 8: Marine 9: Aerospace and Propulsion
Second character: Product Group (A-E) A: Systems, Equipment and Components B: Test, Inspection and Production Equipment C: Materials D: Software E: Technology
Last three digits: Specific controls within each category and group
For example, an ECCN of 3A001 indicates Electronics (3), Systems, Equipment and Components (A), and the specific control number 001.
"ECCN None" is not an official classification category but rather indicates that:
No Export Control Classification Number has been assigned or determined
The classification process is incomplete or has not been performed
The item's status under the EAR is uncertain or undetermined
"ECCN None" essentially means "not yet classified" or "classification pending" and represents a placeholder rather than a definitive export classification.
What About Items Not Subject to the EAR?
Not all items fall under the jurisdiction of the Export Administration Regulations. When an item is determined to be "Not Subject to the EAR," this is fundamentally different from both EAR99 and "ECCN None" classifications. This determination means:
The item falls outside BIS jurisdiction completely
EAR regulations do not apply to the item
No ECCN or EAR99 classification is applicable
Items might be "Not Subject to the EAR" for several reasons:
Exclusively controlled by another agency: Items exclusively controlled by other U.S. government agencies such as:
Public domain information: Information and software that are published and generally accessible to the public
Foreign-made items with minimal U.S. content: Items made outside the United States that contain less than the de minimis level of U.S.-controlled content
Items with no U.S. connection: Foreign-made items that are not the direct product of U.S. technology or software
It is important to properly document when an item is "Not Subject to the EAR" and the rationale for this determination. This classification should never be used as a default when proper analysis has not been conducted.
Key Differences
The Danger of Confusion
Treating "ECCN None" as equivalent to EAR99 can lead to serious compliance violations. When an exporter indicates "ECCN None," they are essentially stating they have not completed the necessary classification work. This can result in:
Improper license determinations
Potential unlicensed exports of controlled items
Export compliance violations
Significant penalties and fines
Reputational damage
Determining the Correct Classification
When a product is not EAR99, determining the proper ECCN requires careful analysis:
Evaluate product specifications: Review technical parameters, functions, and capabilities
Match to CCL entries: Compare the product characteristics to specific entries in the CCL
Consider the "catch and release" process: Check if the item is caught by a specific ECCN description but released by exceptions or notes
Apply the "specially designed" analysis: Determine if the item meets the criteria for being "specially designed" for particular applications
Consider the most specific applicable ECCN: When multiple ECCNs might apply, use the most specific one.
Remember that "ECCN None" is never an acceptable final classification. Every item subject to the EAR must either have a specific ECCN from the CCL or be properly classified as EAR99.
Best Practices
To ensure proper compliance:
Always complete classification: Never leave an item as "ECCN None" for export purposes
Document your process: Keep records of how you determined an item is EAR99 or assigned a specific ECCN
Regularly review classifications: Technologies and regulations change, requiring updates
When in doubt, seek guidance: Consult with export compliance experts or request a classification ruling from BIS
Implement proper training: Ensure staff understands the classification process and the distinction between these terms
Maintain a classification database: Track all product classifications in a centralized system
The Complete Classification Framework
To properly classify items for export control purposes, organizations should follow this hierarchical process:
Jurisdiction determination: Is the item subject to the EAR or controlled by another agency?
CCL analysis: Does the item match any ECCN description?
License determination: Based on the classification (ECCN or EAR99), destination country, end-user, and end-use, determine if a license is required
This structured approach ensures compliance and proper handling of all items according to their regulatory requirements.
Conclusion
Understanding the differences between EAR99, "ECCN None," and "Not Subject to the EAR" is crucial for export compliance. Each designation has distinct meanings and compliance implications:
EAR99: A positive classification for items subject to the EAR but not on the CCL
"ECCN None": An incomplete classification state that requires resolution
Not Subject to the EAR: A determination that the item falls outside EAR jurisdiction entirely
Export compliance requires precision and attention to detail. Understanding these distinctions is fundamental to building a robust compliance program and avoiding costly mistakes.
Patrick Goergen, Founder & CEO, RespectUs
The Export Control Expert & Explainer, 10 March 2025
Understanding 'Final Destination Country' in Export Control: A Critical Guide for Compliance
Final Destination Country in Export Control
First published on 20 January 2025. By Patrick Goergen, The Export Control Expert & Explainer, CEO of RespectUs.
Export Control Excellence
In today's complex global supply chains, determining the "final destination country" of exported goods has become increasingly challenging yet crucial for export control compliance. With multi-step transactions, intermediate processing, and integrated manufacturing becoming the norm, companies must navigate a complex web of regulations to ensure compliance with export control requirements, particularly under EU Regulation 2021/821 on dual-use items and Directive 2009/43 on defence-related products.
1 - The Challenge
The traditional export process where goods moved directly from manufacturer to end-user has become increasingly rare. Modern supply chains now frequently involve multiple countries and transit points, integration of components into larger systems, re-export scenarios, and complex manufacturing processes within global distribution networks. This complexity creates significant challenges in determining the actual "final destination country" - a critical factor for export control compliance, licensing requirements, and risk assessment.
2 - Three Critical Scenarios
2.1. Direct Re-export Scenario
The first scenario involves goods that are exported to an intermediate country and subsequently re-exported without any modification or processing. While this might appear straightforward, it presents significant compliance challenges under export control regulations.
In this scenario, when a company in a EU country A exports controlled items to their client in Country B, knowing that this client will re-export these items to another entity in Country C without modification, Country C must be considered the final destination country. This determination carries important implications for licensing requirements and risk assessment.
The exporter's obligations extend beyond the initial shipment to Country B. They must assess the entire transaction chain, including the ultimate destination's compliance requirements. Knowledge of intended re-export creates additional due diligence obligations, requiring verification of both the intermediate and final destinations against restricted party lists and embargoed country regulations.
Documentation becomes particularly crucial in these cases. The exporter should maintain records demonstrating their knowledge of the entire transaction chain, including end-use certificates and intended use declarations from both the intermediate and final recipients. This documentation will serve as crucial evidence of compliance in case of regulatory scrutiny.
2.2. Substantial Transformation Scenario
The second scenario involves a more complex determination when goods are exported to an intermediate country where they undergo substantial transformation before being exported as new products to another destination. This transformation process fundamentally alters the compliance obligations.
Consider a controlled machine tool component exported from the EU to Country B, where it undergoes substantial manufacturing processes to become part of a civilian manufacturing system later exported to Country C. The determination of final destination depends on the degree of transformation and integration.
Substantial transformation occurs when the exported item loses its original identity through manufacturing, processing, or assembly operations. This transformation must be fundamental, resulting in a new product with different characteristics and uses. The assessment considers multiple factors: the degree of transformation, value addition percentage (typically requiring more than 45% value addition), changes in tariff classification, and modification of technical characteristics.
For instance, if raw materials or basic components are transformed into a completely different product with new functionalities and characteristics, Country B would typically be considered the final destination country. This determination relies on technical assessments, value calculations, and detailed documentation of the transformation process.
2.3. Partial Integration Scenario
The third and most complex scenario involves partial integration where the exported item maintains its original controlled characteristics despite being incorporated into a larger system. This scenario requires the most nuanced analysis and often presents the greatest compliance challenges.
An example would be a controlled semiconductor being integrated into a larger electronic system while maintaining its original capabilities and characteristics. In this case, even though the item becomes part of a larger system, its essential controlled nature remains unchanged and it could potentially be extracted or continue to provide its original function.
Several key factors must be evaluated: the retention of controlled characteristics, the possibility and economic viability of extraction, the continued functionality within the new system, and the contribution to the end product's capabilities. If the controlled item maintains its essential characteristics and can be extracted or continues to serve its original purpose, the country where the final system will be used should typically be considered the final destination country.
The analysis must consider technical specifications, integration methods, and the relationship between the controlled item and the larger system. Documentation should include detailed technical assessments, integration specifications, and clear explanations of how the controlled characteristics are maintained.
3. Technical Criteria for Transformation Assessment
The determination of substantial transformation requires a systematic technical analysis based on multiple criteria. This assessment is crucial for determining the final destination country and must be documented thoroughly for compliance purposes.
3.1. Physical Transformation Assessment
The physical transformation of the item must be evaluated through several technical parameters. The assessment begins with the physical state of the original controlled item and tracks changes through the manufacturing or integration process. Key physical parameters include molecular or material changes, structural modifications, and physical binding characteristics.
For example, when semiconductor materials are processed into integrated circuits, the physical transformation includes crystal growth, doping processes, and layer deposition, resulting in fundamentally different physical properties.
3.2. Functional Analysis
The functional analysis examines changes in the item's operational capabilities and characteristics. This includes evaluation of primary functions, secondary capabilities, and operational parameters. The assessment must determine whether the original controlled functions remain accessible or have been fundamentally altered.
For instance, when a controlled encryption module is integrated into a larger system, the analysis must determine if its encryption capabilities remain independently functional or have been irreversibly merged into the system's overall functionality.
3.3. Technical Performance Metrics
Specific technical metrics must be evaluated to determine the degree of transformation.
Performance Parameters: Changes in key performance indicators must be quantified. This includes processing speed, power consumption, accuracy rates, and other measurable parameters specific to the item's function.
Technical Specifications: Comparison of original versus transformed specifications, including operating ranges, environmental tolerances, and technical limitations.
Integration Dependencies: Assessment of technical interdependencies created during integration, including power supply requirements, control systems, and operational interfaces.
3.4. Value Engineering Analysis
The technical value analysis must consider several quantifiable factors:
Manufacturing Process Complexity: Assessment of the number and sophistication of manufacturing steps, equipment requirements, and technical expertise needed for the transformation.
Component Relationship Analysis: Evaluation of the technical relationship between the controlled item and other components in the final product, including dependency mapping and functional hierarchy.
Technical Value Addition: Quantification of technical improvements or modifications, including enhanced capabilities, new functionalities, and performance improvements.
3.5. Extraction and Reversibility Assessment
The technical feasibility of extraction must be evaluated through detailed analysis:
Physical Extraction: Technical assessment of the physical possibility of separating the controlled item from the final product without destruction.
Functional Recovery: Evaluation of whether original functions can be recovered after theoretical extraction.
Economic Analysis: Technical cost assessment of extraction processes, including required equipment, expertise, and time.
3.6. Technical Documentation Requirements
The transformation assessment must be supported by comprehensive technical documentation:
Process Documentation: Detailed technical descriptions of each transformation step, including equipment specifications, process parameters, and quality control measures.
Test Results: Documentation of performance tests, functional analyses, and technical comparisons between original and transformed states.
Technical Specifications: Comprehensive documentation of original and final technical characteristics, including detailed engineering drawings, specifications, and performance data.
3.7. Integration Analysis Framework
A systematic framework for assessing technical integration includes:
Interface Analysis: Technical evaluation of all physical and functional interfaces between the controlled item and the larger system.
Dependency Mapping: Documentation of technical dependencies created during integration, including control systems, power supplies, and operational requirements.
System Architecture: Analysis of the controlled item's position and role within the overall system architecture.
4. Regulatory Framework Comparison: EU vs. U.S. Approaches
4.1. European Union Framework
The previous analysis is primarily based on EU Regulation 2021/821 (the EU Dual-Use Regulation) and related guidance. The EU approach focuses on:
The definition of "exporter" in Article 2(3) of Regulation 2021/821, which emphasizes the party who determines the destination of dual-use items.
Article 4 of Regulation 2021/821 provisions regarding end-use controls and technical assistance.
EU customs legislation principles regarding substantial transformation and origin determination.
4.2. United States Framework
Under U.S. export control law, the concept of "final destination country" is addressed through multiple regulatory provisions and Bureau of Industry and Security (BIS) guidance. The legal framework primarily stems from the Export Administration Regulations (EAR) and is supplemented by various interpretative rules and enforcement actions.
The EAR define the final destination as the country where the items being exported will ultimately be used or consumed. However, this seemingly straightforward definition becomes complex through various regulatory provisions:
The determination of final destination requires identification of the "ultimate consignee" - the principal party in interest who receives uses the items abroad. The regulations establish that the ultimate consignee is n ot a forwarding agent or other intermediary, but may be the final end-user (EAR §748.5). The end-user, on the contrary, is the person that receives and ultimately uses the exported or reexported items, and may be the purchaser (who has entered into the transaction into the transaction an item for delivery to the ultimate consignee) or ultimate consignee.
The EAR provide specific guidance for items that undergo processing or incorporation.
In case of direct incorporation, when U.S.-origin items are incorporated into foreign-made products, the the location of the manufacturer performing the incorporation is generally considered the destination (EAR §734.3). The de minimis rules (EAR §734.4) determine whether the resulting foreign-made product remains subject to the EAR. Additional licensing requirements may apply based on end-use and end-user controls.
For items undergoing manufacturing or processing, the substantial transformation test determines whether a new country of origin is established. BIS considers factors such as complexity, degree of processing, and value addition. The cost and sophistication of the processing are relevant factors.
Special rules apply when items are integrated into defense articles. ITAR regulations may then supersede EAR requirements. The "see-through rule" may apply, maintaining U.S. jurisdiction. Defense service considerations may affect destination determination
Special considerations apply for technology exports, temporary exports and cerain distribution scenarios (consignment arrangements, distribution agreements, warehousing arrangements and drop shipment scenarios).
The EAR implement a "know or have reason to know" standard regarding final destination determination. Exporters must exercise due diligence in determining the ultimate destination and resolve red flags before proceeding with the export.
4.3. Practical Implications for Global Companies
Companies dealing with both jurisdictions must maintain parallel compliance processes to satisfy both regulatory frameworks, particularly regarding content calculations, documentation requirements, assessment methodologies and record-keeping systems.
These processes must consider variations in technical assessments (EU focus on functional transformation, U.S. emphasis on content tracking and calculations) and different risk factors under each system (with EU more emphasizing on technical capability and end-use, while the U.S. focusing on content percentages and destination controls).
5. Implementation and Risk Management
Effective implementation of final destination determination requires robust systems and procedures. Companies should establish comprehensive compliance programs that include clear decision-making frameworks, technical assessment capabilities, and strong documentation practices. Regular training ensures that staff understand the complexities of these determinations and their significance for compliance.
Risk management procedures should be thorough and systematic, incorporating regular assessments and reviews. Companies need to maintain detailed records of their decision-making processes, technical assessments, and compliance measures. Communication channels must be established to ensure effective coordination between all parties involved in the export chain.
Conclusion
Determining the final destination country in export control requires sophisticated understanding and careful implementation of compliance measures. Success depends on clear understanding of regulations, robust compliance procedures, comprehensive documentation, regular training, and strong communication channels.
The cost of non-compliance can be significant, but with proper procedures and precautions, companies can navigate these requirements effectively while maintaining efficient operations.
About the Author:
Patrick Goergen has a 20 years long experience in working as a lawyer in European and international law, and serving as an Associate Professor in the MBA program of a U.S. university, teaching “Legal Environment of Business”. He is a book author (on media law), speaker (The Export Control Expert & Explainer, www.patrick-goergen.com) and trainer notably on trade compliance questions. He has founded and acts as CEO of the Luxembourg based start-up RespectUs (www.respectus.space) which has built a digital one-stop-shop platform for export control compliance. He has provided external export control officer and consulting services for exporting companies and institutions for more than 15 years.
For more information on export control compliance and best practices, feel free to connect or reach out for detailed discussions.
About Export Control Excellence:
"Export Control Excellence" embodies the commitment to mastering the complex landscape of international trade compliance. The title combines the technical discipline of export controls with the aspiration for excellence, signaling that mere compliance is not enough - we strive for outstanding practice and deep expertise. The series serves as a comprehensive guide for practitioners who face the daily challenges of implementing export control requirements in an evolving global business environment. Through practical insights, detailed analysis, and actionable solutions, these contributions aim to elevate export control from a regulatory obligation to a strategic business enabler. Each article builds upon fundamental knowledge while exploring nuanced aspects of export control, from technical assessments to process optimization, helping professionals navigate complex regulations while maintaining business efficiency. This series is designed for both seasoned practitioners seeking to refine their approach and newcomers aiming to build a strong foundation in export control practice.
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Newsletter 2 ! With HS Code, Risk Assessment and more.
HS Code & Classification - One takes it all
Everyone knows the HS Code. But are you aware how structured the decision making process is ?
A brief reminder
The Harmonized Commodity Description and Coding System generally referred to as "Harmonized System" or simply "HS" is a multipurpose international product nomenclature developed by the World Customs Organization (WCO).
It is governed by "The International Convention on the Harmonized Commodity Description and Coding System" and amended every 5 years.
The system is used by more than 200 countries and economies as a basis for their Customs tariffs and for the collection of international trade statistics. Over 98 % of the merchandise in international trade is classified in terms of the HS.
The HS comprises over 5,600 separate groups of goods identified by a 6-digit code (“HS Code”).
Among the maintenance of the HS, measures are being taken to secure uniform interpretation of the HS and its periodic updating in light of developments in technology and changes in trade patterns. The WCO manages this process through the Harmonized System Committee (representing the Contracting Parties to the HS Convention), which examines policy matters, takes decisions on classification questions, settles disputes and prepares amendments to the Explanatory Notes.
Harmonized System Committee
One of the HSC’s main roles is to take all measures required to secure uniformity in the interpretation and application of the Harmonized System.
Because the WCO is an intergovernmental organization, classification issues are brought to the attention of the national Customs administration concerned or another intergovernmental organization, which might then ask the WCO Secretariat to place the issue on the agenda of the Harmonized System Committee. The International Chamber of Commerce (ICC) participates as an industry representative and observer in meetings of the Harmonized System Committee.
The measures taken following the examination of a classification question can vary depending on the type of case examined
In cases where classification is already clearly determined by a Harmonized System heading or the text of the Explanatory Notes, and consequently raises no particular problems, the Committee may decide simply to refer to the question in the Report of the session at which the question was examined.
In cases where the question raised is of particular interest, the Committee may decide to issue a Classification Opinion, generally accompanied by a description of the product classified, and of its use. These Opinions may sometimes contain indicative illustrations.
These classification opinions have a great impact on how WCO Member States are classifying products in the HS. And sometimes, they have to amend their own rules if the Harmonized System Committee.
A concrete example: LED strips
In 2013, the European Union (EU) classified an article (so-called ‘LED strip’) comprising light-emitting diodes (LED), transistors, resistors and protection diodes, designed to be used, for example, in furniture as a lighting fitting, under CN code 9405 40 99 as ‘other lighting fittings’.
As the article consisted of a printed circuit assembly, it did not fulfil the conditions for semiconductor devices or a discrete LED within the meaning of heading 8541 , and the article had all the objective characteristics of a lighting fitting of heading 9405 . Consequently, classification under headings 8541 and 8543 were excluded. Given its objective characteristics the article had the essential character of a complete lighting fitting of heading 9405 as to function it only needs to be connected to a power supply.
In September 2022, the Harmonized System Committee (HSC) of the World Customs Organisation (WCO) approved classification opinion 8539.51/1 classifying a product called ‘tape lights’, a flexible indoor LED tape light, 24 V, 1,3 W, cool white. The tape lights are linkable sections of modular lighting products that consist of 18 LEDs aligned along the length of each of the sections and have LEDs connected on a printed circuit board (PCB). It is used, for example, for task and accent lighting in kitchen cabinets, back lighting and hard to reach areas. It was classified in HS subheading 8539.51 and according to its objective characteristics, corresponds to CN Code 8539 51 00 , as light-emitting diode (LED) modules.
Given the identical or very similar characteristics of the product with the LED Strip classified by the EU in 2013, the EU tariff classification was not anymore in accordance with the WCO classification opinion 8539.51/1.
As the EU is a contracting party of the International Convention on the Harmonized Commodity Description and Coding System, classification opinions approved by the HSC are guidance instruments for Union tariff measures.
With a view to securing uniformity in the interpretation and application of the Harmonized System at international level and considering that the decision of the HSC is in conformity with the wording of HS subheading 8539.51, the EU has now decided to apply classification opinion 8539.51/1 and repeal its Implementing Regulation (EU) No 708/2013.
Export Control Strength/Weakness & Risk Assessment Template
Elevate Your Export Control Compliance Program!
After years of working with companies on export control compliance, and particularly in risk assessments, RespectUs are sharing their comprehensive Strength/Weakness Assessment Template.
This powerful tool helps to:
✅ Evaluate 11 critical areas of your export compliance program
✅ Identify gaps and opportunities for improvement
✅ Assess your program against industry best practices
✅ Create actionable improvement plans
Perfect for Compliance Officers, Export Control Managers, Legal Teams, Risk Management Professionals, and Quality Assurance Teams
The template covers everything from Management Commitment to Technology Controls, including:
📋 Export Authorization
🎯 Screening Procedures
📚 Training & Awareness
🔍 Product Classification
⚠️ Catch-All Controls...and much more!
It also forms the basis of a priority-based action plan.
Do you want a copy of this template? Send an email to RespectUs (details below).
Our Latest Posts
5 Feb 2025 - Just released: The European Commission's 2022 Annual Report on Dual-Use Export Controls
6 Feb 2025 - Important Update: U.S. Department of State Announces Major ITAR Amendments
7 Feb 2025 - Wrapped up a successful 2.5-day export control training for one of our clients this week
Export Control Decoded: Our series continues ....
Want to see what the most used terms in export control compliance are about ? Have a look on our series on trade compliance terminology!
What you get: Official regulatory definitions, real-world examples, and many more. About dual-use goods, technology transfer, defence articles, license requirements and sanctions.
Missed one ? The latest terms we covered:
4 Feb 2025 - 12 - Security
10 Feb 2025 - 13 - Technology
Next Events
18 March 2025 - Export Control Workshop: Risk Assessment Framework for Logistics Companies
🗓️ Date: Tuesday, March 18th, 2025
⏰ Time: 9:00 - 16:00
📍 Location: Chamber of Commerce, Kirchberg - Luxembourg
Organized by the Cluster for Logistics Luxembourg.
Contact us:
RespectUs, 24 rue Léon Laval, L-3372 Leudelange, G.D. Luxembourg
Tel. +352 27 39 85 20, Email contact@respectus.space, Web www.respectus.space