Export Classification Starts in R&D

Why Classify During R&D?

Many companies treat export classification as a final-step requirement—something to address right before a product is sold, shipped, or marketed. In reality, export classification should begin much earlier, during the research and development (R&D) phase.

Export classification determines which regulations apply, how products and technical data must be protected, and what activities are allowed throughout the product lifecycle (even domestically). Waiting until the point of sale can expose companies to compliance risk long before revenue is ever generated.

Classification Determines the Rules

Every physical item, software, and piece of technical data must be classified under either the International Traffic in Arms Regulations (ITAR) or the Export Administration Regulations (EAR).

This determination drives licensing requirements, data protection obligations, and access controls—including who within your organization may view or use the information. Without a clear classification, companies are effectively guessing which rules apply, a position that is difficult to defend during an audit or investigation.

In practical terms, classification tells you:

• Whether technical data can be shared ( even internally)
• Whether foreign national employees or contractors may access the data
• How data must be stored and safeguarded
• What export or reexport restrictions apply

Compliance Obligations Apply Throughout Product Development

Export controls do not begin at commercialization. Compliance obligations can apply even while a product is still being developed.

During R&D, companies routinely share design data, collaborate with partners or suppliers, employ foreign national engineers, and store technical data on shared or cloud-based systems. If a product or its underlying technology is subject to ITAR—or could reasonably become ITAR-controlled—unauthorized access during development can already constitute an export violation, even if the product is never sold. The same risk applies to controlled technology under the EAR.

Starting classification in R&D allows companies to apply the right controls early, structure teams appropriately, prevent unauthorized data exports, and demonstrate good-faith compliance if questions arise.

Documentation Matters

Early classification is not only about immediate compliance—it can also affect future jurisdiction decisions.

For products developed for commercial purposes, maintaining clear documentation of classification decisions made during R&D can be critical if the product is later adapted for defense or military use. In some cases, this documentation can help support eligibility for the ITAR “Specially Designed” exemption under §120.41(b).

Without contemporaneous records, companies may struggle to prove commercial origin, increasing the risk that an item is unnecessarily pulled into ITAR control.

Why is “Specially Designed” a Risk?

The “Specially Designed” criteria in the ITAR and EAR are among the most misunderstood aspects of export classification.

Companies are often surprised to learn that items do not need to be intended for military use to become ITAR-controlled, that small design changes can shift jurisdiction, or that parts and components may be captured unexpectedly.

Considering “Specially Designed” criteria early in the classification process helps prevent misclassification and downstream compliance issues.

Classifications Require Regular Review

Export classifications are not static. The ITAR and EAR are updated throughout the year, and HTS codes are updated annually, typically in early January.

Best practice is to review classifications at least once per year, monitor regulatory changes, and set a recurring internal reminder.

*“Specially Designed” is a defined concept under both ITAR and the EAR, with different criteria and exclusions in each regulation. As a result, parts, components, accessories, or attachments that are developed for use in a controlled item may themselves become subject to export controls under a “Specially Designed” analysis, even if they are not separately enumerated. The regulatory definitions and exclusions are set out in ITAR §120.41 and EAR §772.

S Massie Consulting supports companies with ITAR and EAR compliance through written compliance programs, internal procedures, and tailored employee training—helping organizations apply the rules consistently so you can say "yes" with confidence.