You’ve worked out your classification strategy and your budget. Now it’s time to prepare. What does that entail? What information is required to conduct a comprehensive, efficient and accurate export classification project? How should the data be organized? These are important questions that will affect the success and timeliness of this critical compliance initiative.
The first task is seemingly simple: You have to identify ALL the items that need classification. If you have more than a few, it is helpful to list them in an Excel spreadsheet that can be sorted and filtered initially, then used eventually to store the completed classifications. In some situations it might be two or more spreadsheets since different sheets may be useful when presenting the information—more on that below. When preparing your list(s), remember to include products, components, parts and technologies; they are all relevant. (Note: chances are you had to work with your IT department to generate the list(s). Stay on good terms with these folks since their assistance will be critical in all phases.)
The second task is to identify and organize information regarding the relevant characteristics of your products and technologies. Why is this important? For each item, a classification expert needs to compare its key technical parameters against the control list criteria of the various USML Categories and ECCNs. For example, if your inventory consists of pumps and valves, their materials are a key consideration; if you have navigation and avionics equipment, then parameters such as “bias stability” and “space-qualification” come into play. Besides the tech specs, other key questions should be asked at this point, since positive answers will justify additional scrutiny:
- Do you have any developmental items that were funded by the Department of Defense?
- Were any of your items designed for military application?
- Does any of your equipment utilize encryption?
Once you have your list of items and have identified the key characteristics, you have to efficiently transfer that information to the classification experts. There are a few ways to do this, depending on your good friends in IT. The most common method is an Excel workbook, often called the Classification Matrix, listing one item in each row, with details provided in various columns such as part number, product/technology description, and key characteristics. If the items can be grouped in logical categories, it is useful to separate them on different tabs where the data can be requested/arrayed more specifically.
If this information can be parsed out of your company’s data system into an Excel matrix, that is ideal. The classification expert will have everything he/she needs. Alternatively, hyperlinks to client data sheets and other technical specifications are sometimes available off the client’s website. Other companies provide OEM part numbers and/or National Stock Numbers (NSNs) which yield additional data through web research. As a last resort, since it is time consuming, the classification expert can make queries by phone or email to OEMs or client sources. In general, from a time/cost standpoint, the more available and relevant the information provided, the more efficiently (read: cheaper) a classification project will proceed.
The final task is obvious but often ignored. Once they are completed, the classifications should be welded to the item (product, component, part or technology) in the information system. This is critical so that any time the item is about to be sold, incorporated into a design, or the subject of any discussion with foreign nationals, the export control classification is immediately evident and proper authorizations are obtained. Furthermore, the existing classifications should be monitored and kept current during times of regulatory change, and all new items should be classified as they enter the inventory.
Commodity classification is Job #1 in your compliance program and these steps will help you conduct the process effectively and efficiently.