What Is a Re Export

So what is a re-export? A re-export is the shipment or transmission of an item from one foreign country to another foreign country. The item started under U.S. rules, left the United States, and now moves again between two other countries. Even though the goods never touch U.S. soil in that second move, U.S. export law can still apply.

This trips up a lot of companies. People assume once an item leaves the U.S., American rules stop. They don’t. A U.S.-origin item stays subject to U.S. controls wherever it goes. This article explains what counts as a re-export, when you need a license, how the de minimis and Foreign Direct Product rules work, and how to stay compliant.

The plain definition of a re-export

The U.S. Bureau of Industry and Security (BIS) writes the rules here. They sit in the Export Administration Regulations, or the EAR. The Bureau of Industry and Security defines a re-export as moving an item subject to the EAR from one country outside the U.S. to another country outside the U.S.

Compare that to a plain export. An export sends an item from the United States to a foreign country. A re-export is the next hop. The item is already abroad, and it moves again.

Here is a simple example. A U.S. company ships a controlled part to a buyer in Germany. That first shipment is an export. Later the German buyer sends that same part to a customer in Brazil. That second shipment is a re-export. The U.S. rules can follow the part into Brazil.

Term	What moves	Example
Export	U.S. to a foreign country	Texas to Germany
Re-export	One foreign country to another	Germany to Brazil
Transfer (in-country)	A change of end use or end user inside the same foreign country	One firm in Germany to another firm in Germany

Why U.S. rules follow the item abroad

The core idea is jurisdiction. A U.S.-origin item subject to the EAR stays subject to the EAR wherever it sits. Shipping it out of the country does not free it. That is why a company in France or Japan can break U.S. law without ever visiting the U.S.

An item can be caught by the EAR in more than one way. Knowing which one applies to your goods is the first job. These rules sit at the heart of U.S. export controls.

• The item was made or originated in the United States.
• The item is foreign-made but holds more than a set share of U.S.-controlled content.
• The item is the direct product of certain U.S. technology or software.
• The item was made by a plant built from certain U.S. technology.

If none of these apply, the item may not be subject to the EAR at all. That analysis matters. It decides whether U.S. re-export rules reach your shipment.

The de minimis rule and U.S. content

Foreign-made products often contain U.S. parts, software, or technology. The de minimis rule sets a threshold for how much U.S. content pulls the whole product under the EAR. It lives in Section 734.4 of the regulations.

The general threshold is 25 percent. If controlled U.S. content is 25 percent or less of the finished product’s value, the foreign product may fall below the line for most destinations. For a small set of sanctioned countries, the threshold drops to 10 percent.

• 25 percent or less U.S. content for most countries.
• 10 percent or less for a short list of embargoed and heavily sanctioned destinations.
• You measure the value of the controlled U.S. content against the value of the whole item.
• Some items get no de minimis treatment at all, so the rule does not save them.

Being under the threshold does not always end the analysis. You still check the destination, the buyer, and the end use. And you cannot mix and match the calculation to force a low number. Follow the method in the rule.

Foreign Direct Product rules

The Foreign Direct Product rules, or FDP rules, work differently. They live in Section 734.9. A foreign-made item can be subject to the EAR because of how it was produced, not because of the parts inside it.

If a foreign item is the direct product of certain controlled U.S. technology or software, U.S. rules can reach it. The same is true if it came off a plant or major piece of equipment that was itself a direct product of that U.S. technology. FDP rules have grown in recent years and now target specific technologies and destinations.

Deemed re-exports: technology and source code

A re-export is not only about physical goods. It also covers information. When you release controlled technology or source code to a person, that release can count as an export or re-export to that person’s home country.

Inside the U.S., that idea is called a deemed export. Abroad, the same act is a deemed re-export. Say a company in Canada gives U.S.-controlled technology to an employee who is a national of a third country. That release is treated as a re-export to the employee’s country.

• Sharing controlled technical data with a foreign national counts as a release.
• Giving access to source code can count too.
• The nationality of the person receiving the data drives the analysis.
• You may need a license for the release even if nothing ships across a border.

When a re-export needs a license

Not every re-export needs a license. You work through a short set of questions to find out. The answer depends on the item, where it goes, who receives it, and what they do with it.

Steps to check a re-export

1. Confirm the item is subject to the EAR using the rules above.
2. Classify it. Find its Export Control Classification Number, or ECCN, or confirm it is EAR99.
3. Check the new destination country against the control reasons for that ECCN.
4. Screen the parties. Run the buyer, consignee, and end user against U.S. restricted party lists.
5. Check the end use. Some uses trigger controls no matter the item.
6. See if a License Exception in Part 740 covers the transaction.
7. If no exception fits and the rules require it, apply to BIS for a license.

Classification is where many mistakes start. If you are unsure how to determine an ECCN number, slow down and get it right. The wrong ECCN can hide a license requirement. If your item is EAR99, do not assume it ships freely, since destination and end use still matter.

Wondering whether the whole thing needs a license? Our guide on how to tell if you need an export license walks through the same logic for the outbound side.

Screening parties in a re-export

Licenses are only half the picture. You also have to know who you are dealing with. That is where denied party screening comes in. You check every party in the deal against government lists of blocked and restricted names.

In a re-export, the parties often live in two or three countries. The foreign buyer, the freight forwarder, and the final customer all need a check. A hit can mean you must stop and seek a license, or walk away.

• Screen the foreign buyer and the ultimate consignee.
• Screen intermediaries, including agents and forwarders.
• Re-screen when parties change or new orders come in.
• Keep records of each screen you run.

Export controls and sanctions overlap here, but they are not the same. If the split confuses you, read our note on the difference between export controls and sanctions. Both can bite a single re-export.

Common re-export mistakes

Most re-export problems come from a few repeat errors. Watch for these.

• Assuming U.S. rules stop at the border. They follow the item.
• Skipping the de minimis math and guessing at U.S. content.
• Missing the FDP rules for high-tech goods.
• Forgetting deemed re-exports when sharing technology with foreign staff.
• Screening the first buyer but not the final customer.
• Relying on a License Exception without meeting all its terms.

Good trade compliance catches these before a shipment moves. It is cheaper to check than to fix a violation later.

Frequently Asked Questions

Is a re-export the same as an export?

No. An export leaves the United States for a foreign country. A re-export moves an item between two foreign countries after it has already left the U.S. The item still carries U.S. rules with it.

Can a foreign company break U.S. re-export law?

Yes. A company outside the U.S. can violate the EAR by re-exporting a controlled U.S.-origin item without the right license. The item stays subject to U.S. rules no matter where it sits.

Does the 25 percent rule always mean no license?

No. Being under the de minimis threshold means the foreign product may not be subject to the EAR for that reason. You still check the destination, the parties, and the end use. Some items get no de minimis treatment at all.

What is a transfer (in-country)?

A transfer (in-country) is a change of end use or end user inside the same foreign country. The item does not cross a border, but the new use or user can still require a license under the EAR.

Key Takeaways

A re-export moves an item subject to the EAR between two foreign countries, and U.S. rules can still apply. Start by asking if the item is subject to the EAR through its origin, its U.S. content, or the Foreign Direct Product rules. Run the de minimis math, classify the item, check the destination and end use, and screen every party. Remember that sharing controlled technology abroad can be a deemed re-export even with no shipment. When you are unsure, get the classification and screening right before goods move. If you want help building a re-export and screening process, contact us.