United States: The STA License Exception By The Numbers

Last Updated: April 6 2018
Article by Olga Torres

Section 22 CFR §740.20 of the Export Administration Regulations ("EAR") provides for the Strategic Trade Authorization ("STA") license exception. As the name suggests, STA permits the export of EAR-controlled items which would otherwise require a license to be exported without a license. STA was implemented as part of Export Control Reform ("ECR"). In order to take advantage of the license exception, there are various requirements that must be met including maintaining certain records, such as a Prior Consignee Statement, for a period of five years.1 In the case of 600-series items, the recordkeeping requirements are even more cumbersome.

Audits of STA compliance are common and consist of demands from the Bureau of Industry and Security ("BIS") for the required STA supporting documentation. Examples of the supporting documentation requested include i) prior consignee statement, ii) written notification to consignee of STA shipment, iii) name of ultimate end user and country of destination, iv) full ECCN with subparagraph, v) description of how you perform your prior authorization approval verification check, and vi) confirmation as to whether any item is 600 series Major Defense Equipment.

Companies typically have 14 days to supply the documents to BIS, although extension requests are frequently granted. BIS reported that, in 2016, fifty-four STA audits were performed, and only three were not compliant.2 In the event a company is unable to provide the required documentation, BIS can refer the case to the Office of Export Enforcement ("OEE"), and the company would then be subject to potential penalties and fines.

It is no surprise then that relatively few exporters use the STA license exception.3 This is because it is often easier to obtain a license, despite the proponents of the ECR encouraging exporters to use STA. In fact, those who use STA have an abnormally high risk of being audited for those transactions. Between July 2011 and December 2016, 849 companies used license exception STA.4 During the same time period, BIS conducted 296 STA audits.5 This means that over 30% of STA users were subject to government review. In addition to higher risks of audit, use of the STA license exception also opens up the possibility of BIS auditing foreign consignees to ensure they have the relevant documentation as well. All of this increases the chances of the exporter's case being referred to OEE, which would open the door for potential penalties.

In the case of companies that have robust export compliance programs, STA may be a good option. A few tips for compliance to ensure that export issues are avoided include i) designation of a point of contact with the responsibility to determine STA eligibility, ii) maintaining accurate and legible records, iii) prepare for document review and clearly index all the documentation you are maintaining for ease of retrieval and production, iv) properly train your employees, v) adequately monitor your electronic export information filings to ensure STA is actually being declared by your freight forwarder, vi) conduct periodic reviews of your own shipments, vii) communicate with your consignees to ensure they understand the requirements of STA, and viii) create an internal checklist for STA requirements prior to shipment.  

In the event you are contacted by BIS about an STA shipment and you realize you may not have been meeting the STA requirements, you should consider escalating the situation to upper management, in-house counsel, or outside trade counsel.


1 22 C.F.R. § 740.20.

2 Bureau of Industry and Security, Publications, BIS Annual Report to Congress for Fiscal Year 2016, https://www.bis.doc.gov/index.php/forms-documents/about-bis/newsroom/1629-bis-report-to-congress-fy-2016/file (last visited Mar. 5, 2018).

3 Bureau of Industry and Security, BIS License Exception Statistics, https://www.bis.doc.gov/index.php/forms-documents/technology-evaluation/ote-data-portal/2173-sta-use-july-2011-december-2016/file. (last visited Mar. 5, 2018).

4 Id.

5 Bureau of Industry and Security, Publications, BIS Annual Report to Congress for Fiscal Year 2012, https://www.bis.doc.gov/index.php/forms-documents/policy-guidance/850-bis-annual-report-2012-final-12-12-13/file (last visited Mar. 5, 2018); Bureau of Industry and Security, Publications, BIS Report to Congress for Fiscal Year 2013, https://www.bis.doc.gov/index.php/forms-documents/about-bis/newsroom/866-bis-annual-report-to-congress-for-fiscal-year-2013/file  (last visited Mar. 5, 2018); Bureau of Industry and Security, Publications, BIS Report to Congress for Fiscal Year 2014, https://www.bis.doc.gov/index.php/forms-documents/policy-guidance/1183-bis-annual-report-2014/file (last visited Mar. 5, 2018); Bureau of Industry and Security, Publications, BIS Report to Congress for Fiscal Year 2015, https://www.bis.doc.gov/index.php/forms-documents/policy-guidance/1389-bis-annual-report-2015/file (last visited Mar. 5, 2018); Bureau of Industry and Security, Publications, BIS Annual Report to Congress for Fiscal Year 2016, https://www.bis.doc.gov/index.php/forms-documents/about-bis/newsroom/1629-bis-report-to-congress-fy-2016/file (last visited Mar. 5, 2018).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Olga Torres
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As a member of the International Lawyer Network (“ILN”) Torres Law is looking forward to attend the ILN’s 31st Annual Conference hosted by Ferrari Pedeferri Boni Studio Legale Associato in Milan, Italy.

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