BIS official points to benefits of obtaining end-use/end-user statements in all export transactions
According to a trade press report, a Bureau of Industry and Security ("BIS"), Department of Commerce official speaking at the March 2025 BIS Update Conference on Export Controls and Policy recommended that U.S. exporters generally require their overseas customers to complete end-use and end-user statements ("End-Use/User Statements" or "Statements") for all export items controlled by the Export Administration Regulations ("EAR"), including those classified as EAR99, which generally consist of low-technology consumer goods that do not require a license in most situations. End-Use/User Statements generally require customers to certify that they will not use the exporter's products in a manner that violates U.S. export laws or reexport or transfer those products to persons, entities or destinations prohibited from receiving them ("Restricted Parties").[1]
EAR99 Guidance
The official's advice as reported to require End-Use/User Statements for EAR99 items was particularly notable. EAR99 is the "catch all" classification for items controlled by the EAR but not falling within a specific Export Control Classification Number ("ECCN") in the Commerce Control List ("CCL"), Supplement No. 1 to 15 CFR Part 774. Items classified as EAR99 are subject to the least restrictive export controls, and often exporters of EAR99 items do not require End-Use/User Statements because they consider them to present a low risk of prohibited end-uses or end-users. However, in recent years the U.S. has expanded the export controls applicable to EAR99 items,[2] including prohibitions on the export of a long list of such items to Russia or Belarus, as well as to certain military or military-intelligence end-uses or end-users.[3]
Benefits of End-Use/User Statements
Always requiring an End-Use/User Statement adds a layer of due diligence protection, allowing exporters to obtain additional information about their customers and to check whether a customer's stated end-use for the exported products raises Red Flags.[4] Should a potential export violation arise, a Statement also evinces an exporter's due diligence compliance efforts, and provides a potential mitigating factor for a monetary penalty (which currently can be up to the higher of $374,474 or twice the value of the transaction, per violation).[5] For many exporters with good customer relationships, adding the Statement to their contracts, or as a standalone document, presents minimal additional effort for both exporter and customer. However, some customers may object, and in such instances the exporter must balance the impact on the customer relationship against any potential enforcement risk. While the use of End-Use/User Statements may currently be the exception rather than the rule for some industries or destinations, particularly for EAR99 items, as the usage of Statements increases over time, they likely will provoke fewer customer objections.
An End-Use/User Statement generally requires customer contact information, information about the customer's line of business, and a statement of the customer's end use of the product, all signed and certified by an authorized company official. If the Statement is not part of a contract, it should be signed by an official authorized to certify the veracity of the responses and to bind the company. End-Use/User Statements are often incorporated into contracts or sales agreements with additional, broader language requiring compliance with U.S. export laws, or they can be a separate document (with the latter an option when a contract has already been signed without an End-Use/User Statement included). The specific language for End-Use/User Statements can vary by destination country, product, industry, and customer, with some of those variables presenting heightened concerns justifying a request for more customer information or more detailed certifications. Other situations, such as for exports of EAR99 products to friendly U.S. trading countries and/or well-known customers, may call for only a simple, generic Statement.
Don't Forget Destination Control Statements
As a reminder, exporters are already required to include a Destination Control Statement as an integral part of their commercial invoices for exports of all items listed on the CCL, except for EAR99 items, or exports under License Exception BAG (baggage) or GFT (gift parcels and humanitarian donations). The Destination Control Statement consists of a specific statement to be included verbatim, and the rule includes other requirements for certain ECCNs. 15 CFR § 758.6. Often exporters find it easier to include the Destination Control Statement in all of their invoices for export items or simply for all invoices.
Takeaway
The expanded use of End-Use/User Statements appears only to be an informal suggestion from BIS, not a requirement. Nonetheless, in the world of export compliance, the benefits to be gained by exporters from integrating End-Use/User Statements into their export regimens can more than outweigh the burdens and, therefore, should be seriously considered.
[1] When U.S. companies sell domestically but know or have reason to believe that their products will be subsequently exported, they should consider obtaining Statements from their U.S. customers.
[2] The Part 744 end-user and end-use controls (15 CFR Part 744) and General Prohibition Seven (15 CFR § 736.2(b)(7)) have long prohibited the export of all items subject to the EAR, including EAR99 items, for use in proliferation activities including nuclear, chemical or biological weapons, missiles and other weapons of mass destruction. General Prohibition Seven also prohibits the export of items not subject to the EAR for such activities.
[3] A pending BIS Proposed Rule would expand and reorganize the military and military-intelligence end-use and end-user controls, adding, among other changes, a military-support end-user rule. 89 FR 60985 (July 29, 2024).
[4] Red Flags are warning signs indicating a transaction may involve prohibited end-uses, end-users, or destinations, requiring further investigation. BIS provides a useful list of Red Flag Indicators, with additional advice in its Know Your Customer Guidance.
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