DEFINITION of Anti-Diversion Clause
The anti-diversion clause is a regulation that prevents exported goods from going to destinations not approved by the government. In the United States, the Department of Commerce's Bureau of Export Administration requires commercially exported goods to be accompanied by a destination control statement saying that the goods are only authorized for export to certain locations and that U.S. law prohibits their diversion. The latter part of this statement is the anti-diversion clause.
Often, in practice, you may see anti-diversion shortened to just diversion.
BREAKING DOWN Anti-Diversion Clause
The destination control statement and anti-diversion clause must appear on the invoice and ocean bill of lading or air waybill that accompanies the exported goods. The statement also certifies that to the best of the shipper's knowledge, the shipment is headed to its stated destination. National security, nonproliferation and foreign policy are some of the reasons why a country's government may be concerned with controlling its exports. In the United States, most exports of items on the Commerce Control List must contain a destination control statement.
Diversion occurs when products are sold in “unauthorized” places. The U.S. authorities discourage this because of government issues restrictions on U.S. exports to certain countries. These restrictions could be a variety of reasons, including official government sanctions, trade issues and concerns for consumer safety. When this occurs, certain categories of goods are identified as being those most likely to be illegally diverted to the restricted country. The bills of lading or other transit documents of such products will display official wording that the export license of the exporter is not valid except for specified receivers of the goods. The official wording on the bill of lading or other transit documents is referred to as a destination control statement.
Anti-diversion worries are a fairly standard concern for entities participating in international trade through the export of domestic goods.