A Comprehensive Guide to No License Required (NLR) Under U.S. Export Controls

When exporting goods, technology, or software from the United States, understanding whether a license is required is a key part of compliance. Under the Export Administration Regulations (EAR), certain items qualify for an NLR (No License Required) status, allowing them to be exported without a specific license. The process for determining NLR eligibility is critical, as failure to comply with export control regulations can lead to significant penalties.

This article provides a step-by-step guide to determine NLR status, covering jurisdiction determination, item classification, and the Commerce Country Chart. It is designed to help both domestic and foreign exporters understand when and how NLR may apply to their transactions.

Step 1: Determine Export Jurisdiction and Control

Before proceeding with NLR eligibility, the first step is to identify whether the item falls under the Export Administration Regulations (EAR) or International Traffic in Arms Regulations (ITAR) jurisdiction. While ITAR governs military items and services, EAR controls cover dual-use items—those with both civilian and potential military applications—as well as purely commercial items.

Define the Activity

Start by defining whether your activity constitutes an export under EAR, which includes any item shipped, transferred, or transmitted to a foreign country. This also applies to technology or software shared with foreign nationals within the U.S.

Identify Regulatory Jurisdiction

Consult the U.S. Munitions List (USML) to confirm if the item falls under ITAR. If it’s not listed, then the item is likely under EAR jurisdiction. Confirm EAR jurisdiction by checking the Commerce Control List (CCL) for specific classification criteria.

Step 2: Classify the Item and Determine the ECCN

Once you’ve confirmed EAR jurisdiction, the next step is to determine the Export Control Classification Number (ECCN) for the item. The ECCN will dictate the specific export controls applicable to the item and determine if NLR is an option.

Identify the ECCN

Review the CCL to find the ECCN that applies to your item. An ECCN provides a five-character alpha-numeric code that categorizes items based on type and function. If the item is EAR99, it is a low-risk item not subject to specific CCL controls and generally qualifies for NLR.

Use the ECCN to Check for NLR Eligibility

Not all ECCNs are eligible for NLR. Some items have restrictions based on the destination country, end-user, or end-use. To determine if the NLR designation is available, you’ll need the ECCN code and the country of destination.

Step 3: Use the Commerce Country Chart

The Commerce Country Chart (Supplement No. 1 to Part 738 of the EAR) is essential for determining whether a license is required for the destination country. The chart includes a column for each ECCN reason for control, allowing you to identify if the specific item can be shipped under NLR.

Find the Country on the Chart

Identify the column for the relevant ECCN and locate the country of destination on the Commerce Country Chart. If there is an “X” in the box under the column for the applicable ECCN, a license is required for export to that country.

Verify the Item's Eligibility for NLR

If no “X” appears for the specific ECCN and country combination, then the item may be eligible for NLR. Remember, NLR is most frequently used for EAR99 items and ECCNs with no applicable controls for the country of export.

Step 4: Documenting and Applying the NLR Designation

Proper documentation is critical to demonstrate compliance in the event of an audit. Even when using NLR, you must retain accurate records of how you determined that a license was not required.

Record the ECCN and Country Chart Determination

Document the ECCN, country of destination, and results from the Commerce Country Chart. This shows how you reached the conclusion that NLR applies.

Use NLR on Export Documentation

For each NLR transaction, include the phrase “NLR” along with the ECCN on all export documents, such as invoices and shipping paperwork.

Check for Red Flags and End-Use Considerations

Even if NLR is permissible, the export could be prohibited if red flags or restricted end-uses are identified, such as military end-uses in certain countries. The EAR’s General Prohibitions apply, and additional due diligence may be necessary for countries with heightened risks.

Special Considerations for Foreign Exporters

For foreign exporters handling U.S.-origin items, understanding NLR is essential for compliance with U.S. export controls. If you’re exporting items manufactured with U.S.-origin components or technology, NLR may still apply, but only after careful review.

Determine if the Item Falls Under EAR Jurisdiction

The de minimis rule often applies to foreign-produced items incorporating U.S. technology or software. If U.S.-origin controlled content exceeds the de minimis threshold (typically 25% for most countries and 0% for embargoed countries), the export is subject to the EAR.

Check the Commerce Country Chart for NLR Eligibility

As with U.S. exporters, foreign entities must consult the ECCN and Commerce Country Chart to determine if NLR applies based on the destination country.

Document Compliance Efforts

Foreign exporters should maintain records of all ECCN determinations and any BIS guidance to demonstrate that U.S. export control laws were followed.

Additional Restrictions for Embargoed Countries

When dealing with embargoed countries, NLR is typically unavailable. The EAR Part 746 restrictions and OFAC regulations add extra layers of controls that override standard export license exceptions, including NLR. For items headed to embargoed destinations, consult EAR Part 746 to determine whether any general or specific restrictions apply.

Review OFAC Sanctions

Check the OFAC Sanctions List to ensure that the end-user and destination are not subject to U.S. sanctions. OFAC’s regulations supersede any EAR-based exceptions, including NLR.

Understand the End-Use Controls

The EAR imposes strict limitations on items that may support military or prohibited end-uses in sanctioned countries. Ensure the export does not contribute to restricted end-uses or involve sanctioned entities.

Conclusion

The NLR designation provides a streamlined path for compliant exports of certain low-risk items. By following the steps to assess jurisdiction, classify items, and review the Commerce Country Chart, both domestic and foreign exporters can determine NLR eligibility. While NLR simplifies the export process, it is essential to document your findings and check for additional restrictions, especially when dealing with embargoed or high-risk destinations.

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Sources Cited

• Code of Federal Regulations. "Title 15 CFR Part 738 - Commerce Control List Overview and the Country Chart." eCFR.gov

• Bureau of Industry and Security. "Export Administration Regulations (EAR)." BIS.gov

• U.S. Department of the Treasury - Office of Foreign Assets Control (OFAC). "Sanctions Programs and Information." Treasury.gov