Reading the Country Chart. Walking the license question.

The license question splits into two parts. Is your item on the Commerce Control List? Yes or no answers do different things. If yes, the second question is whether the destination triggers a license requirement for the reason the item is controlled. The answer lives in a grid at the back of Part 738 of the EAR called the Commerce Country Chart.

This week, how the Country Chart actually works, how to read it without losing an afternoon, and the three-step process the regulation itself spells out.

The license-determination rule lives at 15 CFR 738.4. Once you have an ECCN, the License Requirements section of that ECCN tells you the Reason for Control. The Reason for Control is a category like National Security (NS), Anti-Terrorism (AT), Nuclear Nonproliferation (NP), Chemical and Biological (CB), Missile Technology (MT), and others. Each Reason for Control points to one or two Country Chart columns, written as "NS Column 1," "AT Column 2," and so on.

Supplement No. 1 to Part 738 is the Country Chart itself. It is a grid where the rows are countries and the columns are Reasons for Control. If an X appears in the cell where your destination country meets the column for your Reason for Control, the export requires a license unless a License Exception applies. If the cell is blank, no license is required for that reason for control to that destination.

The regulation walks the process explicitly at 738.4(a)(2). Find the ECCN. Identify the Reason or Reasons for Control. For each Reason for Control, find the Country Chart column identifier. Look up the destination row. Check for the X. If yes, license required (or a License Exception). If no, no license required for that reason for control.

An ECCN can be controlled for more than one reason. ECCN 2A000 in the regulation's own sample analysis is controlled for NS, NP, and AT. The Country Chart has separate columns for each reason. You walk each one independently. If your destination triggers an X for any one of the reasons that applies to your item, a license is required (or a License Exception must apply).

The corollary: not all NS or AT columns are the same. The Country Chart has NS Column 1 and NS Column 2, AT Column 1 and AT Column 2, and similar splits for several Reasons for Control. A given country may be subject to NS Column 1 and not NS Column 2, or vice versa. Read the ECCN entry to find the specific column it sends you to.

The regulation provides its own sample at 738.4(b). The sample ECCN is 2A000.a, valued at $10,000. Reasons for Control listed in the ECCN are NS, NP, and AT. The applicable Country Chart columns are NS Column 2 (the entire entry is controlled for NS), NP Column 1 (only paragraph .b is controlled for NP, so this column does not apply to a paragraph .a item), and AT Column 1 (the entire entry is controlled for AT).

For the .a item in the sample, NS Column 2 and AT Column 1 are the applicable columns. The shop walks each one. If the destination shows an X in NS Column 2, a license is required unless an NS exception applies. If the destination shows an X in AT Column 1, a license is required unless an AT exception applies.

The shop then checks the List-Based License Exceptions in the ECCN entry. The sample shows LVS at $5,000 and GBS marked "Yes." LVS at 15 CFR 740.3 is the Limited Value Shipments exception. A $10,000 shipment is above the $5,000 threshold, so LVS does not apply. GBS at 15 CFR 740.4 applies to certain Group B countries. If the destination is a Group B country, GBS may be available.

If no exception applies, the shop files a license application. If one does, the shop uses it and documents the choice on the EEI filing.

15 CFR 738.4(a)(2)(ii)(B) flags something important. Even if the Country Chart returns no license requirement, General Prohibitions Four through Ten still apply. Those are the end-use, end-user, and other prohibitions at 15 CFR 736.2(b)(4) through (b)(10).

GP4 prohibits taking any action in violation of a denial order. GP5 prohibits knowingly exporting to a prohibited end user or end use. GP6 prohibits exporting to embargoed destinations. GP7 prohibits supporting certain proliferation or military-intelligence activities. GP8 covers transit shipments through certain countries. GP9 prohibits violating any order, license, or License Exception condition. GP10 prohibits proceeding with a transaction when you know a violation will occur.

The Country Chart tells you about list-based controls under General Prohibitions One through Three. The end-use and end-user controls under General Prohibitions Four through Ten run on a separate track and are tested separately at Part 744 of the EAR.

So a "no license required" answer from the Country Chart only means no license required on the classification-and-destination question. It does not mean the export is approved. The screening, end-use, and end-user analyses still have to be done.

Pick your top five exported items. For each one, walk this sequence.

Find the ECCN. If it is EAR99 (subject to the EAR, not on the CCL), the Country Chart is not the test, but you still walk the end-use and end-user analysis.

If it has an ECCN, list every Reason for Control. Find every relevant Country Chart column for each reason.

For each of your top three destinations, check each cell. Write down X or blank. If any cell is X, name the License Exception you would use, or note "license required."

Run General Prohibitions Four through Ten on each transaction. End user clean? End use clean? Destination not embargoed?

If you want the walk to produce a memo with a named reviewer, a timestamp, and a regulation cited, run one item through ExChek at exchek.us. Free. Want a walk-through? Book a call.

Find the X. Walk the exception. Keep the file.

Matt Dula
ExChek

ExChek is software, not legal advice. Every determination is reviewed and approved by you. American-owned, built to help American SMBs navigate export compliance.