Strategic Trade Authorization: A Little-Known International Trade Benefit
by Dan Minutillo, Partner
International Trade Law
WHAT IS THE STA EXCEPTION
The STA is the Strategic Trade Authorization Exception utilized in US export law to export items from the US to other countries without a US export license. 15 CFR 740.20. Generally, a country must be in US Country Group A to be eligible for use of STA.
COUNTRY GROUP A
US export law compartmentalizes countries by group. The most friendly and helpful to the US are in Country Group A, like Canada, and down to embargoed countries in Country Group E, like North Korea. US export law places fewer export restrictions (more products able to leave the US without an export license) on US allies and countries that, even if not a possible partner in war, are friendly to the US. Those countries appear in Country Group A.
The list of countries in Country Group A can be found at 22 CFR 740.20. For the most part, this Country Group comprises countries that are most friendly and least threatening to the US.
If a country is in Country Group A, then a company can use the STA Exception to export products and technology to it without an export license. Using this Exception radically quickens product movement from the US to that country.
CONDITIONS IF USING STA
However, even if eligible to use the STA Exception, certain conditions must be met by the exporter and the exporter’s consignee (the middle-person acting as a conduit, like a freight forwarder) as follows:
- The exporter must furnish the export control classification number, the ECCN, of each item to be exported under STA to the consignee.
- A reexporter or transferor must furnish this ECCN to subsequent consignees.
- The consignee can rely on the ECCN provided unless it knows that this ECCN is incorrect or has changed due to changes in regulations or in the product to be reexported.
- The consignee must complete a written statement that agrees with the requirements of the STA Exception.
- The exporter must notify the consignee when a shipment using STA is made.
In summary, the STA requires notifications, statements, and recordkeeping.
AGENCIES OTHER THAN THE DEPARTMENT OF COMMERCE HAVE AUTHORITY
Most people are surprised to learn that many US government agencies have the authority to impose export restrictions on products and technology leaving the US. For example, License Exception STA may not be used for any item on the US Commerce Control List, the CCL, if it is subject to the exclusive export control jurisdiction of another US government agency like the Department of State, the Department of Energy, or the Nuclear Regulatory Commission.
The Bureau of Industry and Security is authorized to use STA for the requested end-use items. Rejections of the use of the STA Exception will appear on the Simplified Network Application Process-Redesign known as SNAP-R.
POLITICAL IMPEDIMENTS TO IMPLEMENTING THESE CHANGES
Why would the US not want certain countries to get specific technology using the STA Exception?
An example of possible rejection of using the STA Exception–exports into Africa. The habitual impediments quietly discussed among nation-state leaders in opposition to exporting US technology using the STA Exception into Africa are:
- Geopolitical competitive considerations;
- Economic challenges of the importing country;
- Restrictions by Africa on foreign investments;
- Political and business corruption violating various US anti-corruption regulations; or
- Insufficient African infrastructure to benefit from the chosen technology.
The first hurdle, geopolitical competitive consideration, must be overcome before addressing the other impediments mentioned above. Addressing geopolitical issues calms fear among competing nations.
Russia and China have invested heavily in Africa. Both countries and the US have competing interests in Africa. Africa holds about 30% of the world’s mineral reserves, including gold, copper, cobalt, and uranium. A tasty target for developed countries. If a developed country provides military security, food, technology, or health care for the people of a poorer country, and it’s time to sell a needed natural resource to competing developed countries, including the benefactor, who will stand first in line to get that resource?
USE THE STA EXCEPTION
The STA Exception is a powerful but little-known international trade law tool that helps to quickly move products from the US to other countries without an export license. Using the STA Exception, if applicable, can increase company sales and speed up the movement of products from the US to foreign customers because an export license will not be required.
If you export products from the US, look into using the STA Exception to save money and time!