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Complying with U.S. Export Controls. Bureau of Industry and Security Department of Commerce. Bureau of Industry and Security Department of Commerce. John Bushnell July 25, 2013 QUE Group 2013 Conference, San Diego, CA. Our Contact Information.

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Bureau of industry and security department of commerce

Complying with

U.S. Export Controls

Bureau of Industry and Security Department of Commerce

Bureau of Industry and Security Department of Commerce

John Bushnell

July 25, 2013

QUE Group 2013 Conference, San Diego, CA


Our contact information

Our Contact Information

Bureau of Industry and Security

Western Regional Office

2302 Martin Street, Suite 330

Irvine, California 92612

T: 1-949-660-0144

F: 1-949-660-9347

Northern California Branch

160 West Santa Clara Street, Suite 725

San Jose, California 95113

T: 1-408-998-8806

F: 1-408-998-8677

www.bis.doc.gov


Bis mission statement

BIS Mission Statement

Overview

To advance U.S. national security,

foreign policy, and economic objectives

by ensuring an effective export control

and treaty compliance system and

promoting continued U.S. strategic

technology leadership


Transactions we control

Transactions we control

BIS regulates “exports” and

“reexports” of “items” “subject to the

EAR”in addition to certain activities of U.S. persons.


Authority to administer controls

Authority to Administer Controls

  • Export Administration Act (EAA)

  • International Emergency Economic Powers Act (IEEPA)

  • Export Administration Regulations (EAR)

BIS

EAR


Reasons why we control exports

Reasons Why We Control Exports

  • National Security

  • Foreign Policy

    • Crime control

    • Anti-terrorism

    • Regional Stability

  • Non Proliferation

    • Nuclear weapons

    • Chemical/biological weapons

    • Missiles


Multilateral export control regimes

Multilateral Export Control Regimes

  • Wassenaar Arrangement

    • Supplement 1 to Part 743

    • www.wassenaar.org/

  • Missile Technology Control Regime (MTCR)

    • Supplement 1 to Part 740 (A:2)

    • www.mtcr.info/

  • Nuclear Suppliers Group (NSG)

    • Supplement 1 to Part 740 (A:4)

    • www.nuclearsuppliersgroup.org/

  • Australia Group (AG)

    • Supplement 1 to Part 740 (A:3)

    • www.australiagroup.net


Export administration regulations

Export Administration Regulations

  • Designed to implement the Export Administration Act

  • Apply to commercial and some military items

    • Items that can be used in both commercial and military/strategic applications

    • Also apply to items that have solely civil uses

    • Other agencies have jurisdiction over some exports


How do i determine my regulatory requirements

How do I determine my regulatory requirements?

Depends upon:

1. What is the product?

2. Where is the product going?

3. Who is the end user?

4. What is the end use?


End use concerns

End use concerns

  • Nuclear

    • Section 744.2

  • Chemical/Biological Weapons

    • Section 744.3

  • Missile

    • Section 744.4

  • Support of these activities by a U.S. Person

    • Section 744.6


What is an item section 734 2

What is an Item?(Section 734.2)

Software

Technical Data

Commodity


What is an export

What is an export?

Definitions and Terms

  • A shipment out of the United States

  • An electronic transmission out of the United States

  • Release of technology to a foreign national in the United States

    • Technology – specific information necessary for the “development”, “production”, or “use” of a product


What is a reexport

What is a Reexport?

  • A shipment of a U.S. origin item from one foreign country to another

  • A shipment of a foreign produced item containing U.S. origin parts, from one foreign country to another

  • Shipment from one foreign country to another of an item manufactured abroad based on U.S. origin technology


Who is the exporter part 772

Who is the Exporter?(Part 772)

  • The person in the United States who has the authority of a principal party in interest to determine and control the sending of items out of the United States.


Important concept

IMPORTANT CONCEPT:

Having an Export Control Classification Number (ECCN) does NOT automatically mean that a license is required to all destinations

Being classified as EAR99 does NOT automatically mean that a license is NOT required to a particular destination


Are you subject to the ear continued

Are You Subject to the EAR?(Continued)

U.S. Persons & Foreign Nationals

  • Certain activities of U.S. persons

    (Part 744)

  • Release of certain technology and source code to foreign nationals in the U.S. (“Deemed Exports” (Part 734))


Deemed exports section 734 2 b 2 ii

Deemed Exports(Section734.2(b)(2)(ii))

The release of technology or source code subject to the EAR to a foreign national in the United States is “deemed” to be an export to the home country of the foreign national.


Deemed exports section 734 2 b 2 ii1

Deemed Exports (Section734.2(b)(2)(ii))

Situations that can involve release of U.S technology or software include:

  • Tours of laboratories

  • Foreign national employees involved in

    certain research, development, and

    manufacturing activities

  • Foreign students or scholars conducting

    research

  • Hosting of foreign scientist


Deemed exports section 734 2 b 2 ii2

Deemed Exports (Section734.2(b)(2)(ii))

Export Enforcement Note

Deemed Export violations are one of the most common types of violations

Because the violation typically occurs in the U.S. and all parties are typically in the U.S., this is very often the easiest to prove in a court of law.


Exempted from the rule section 734 2 b 2 ii

Exempted from the Rule(Section734.2(b)(2)(ii))

  • Any foreign national is subject to the deemed export rule except:

    • A person granted U.S. citizenship;

    • A person granted permanent residence status (i.e., “Green Card” holders);

    • A person granted status as a “protected individual” under 8 U.S.C. 1324b(a)(3)


What kind of authorization is required to export

What Kind of Authorization is Required to Export?

NO LICENSE REQUIRED (NLR)

LICENSE EXCEPTION

LICENSE or

VEU


On line access

ON LINE ACCESS

BIS home page

www.bis.doc.gov

E-mail notifications

(Seminars, Regulatory changes, etc.)

SNAP-R

(Online Licensing and other requests)


Commerce control list country chart

Commerce Control List&Country Chart


Commerce control list part 738 and part 774 supplement no 1

Commerce Control List(Part 738 and Part 774, Supplement No. 1)

  • Contains lists of items subject to licensing authority of BIS

  • Each entry is called Export Control Classification Number (ECCN)

    • Five alpha-numeric characters

  • Items listed in terms of technical parameters


Eccn structure section 738 2

ECCN Structure(Section 738.2)

Category

Reason for Control

3A001

Sequential

Numbering

Product Group


Ten categories in the ccl 0 to 4

Ten Categories in the CCL(0 to 4)

0. Nuclear Materials, Facilities & Equipment and Miscellaneous

1. Materials, Chemicals, Microorganisms & Toxins

2. Materials Processing

3. Electronics Design, Development and Production

4. Computers

e.g.:3A001


Ten categories in the ccl 5 to 9

Ten Categories in the CCL(5 to 9)

5.Telecommunications (PART 1) and

Information Security (PART 2)

6. Sensors and Lasers

7. Navigation and Avionics

8. Marine

9. Propulsion Systems, Space Vehicles and Related Equipment

e.g.: 5A001


Eccn structure product groups

5A101 5B101 5C101

5D101 5E101

ECCN Structure- Product Groups

Equipment, assemblies & components

Test, inspection & production equipment

Materials

Software

Technology


Finding your eccn

Finding Your ECCN

  • Check the Commerce Control List (CCL) alphabetic index

  • Review general characteristics of item to arrive at Category and Product Group

  • Match characteristics of item with ECCN and subparagraph

BIS

CCL


Classification request requirements section 748 3

Classification Request Requirements(Section 748.3)

Use SNAP-R the BIS online request system (discussed in detail later)

Identify specific items of concern

Attach Detailed Technical Specifications as a .pdf


Working with the country chart part 738 supplement no 1

Working with the Country Chart (Part 738, Supplement No. 1)

  • Contains licensing requirements based on destination and reason for control

  • Used with the CCL to determine if you need a license


Bureau of industry and security department of commerce

DEGREE OF CONCERN

REASON FOR CONTROL

PDF

VERSION


Bureau of industry and security department of commerce

E-CFR VERSION

******

EASIER TO READ WITH TWO WINDOWS OPEN


Using the commerce control list with the country chart

Using the Commerce Control List with the Country Chart

  • Determine ECCN

  • Check reasons for control

  • Match specific controls to country chart column

    • If a territory, possession, or department of a foreign country is not listed on the country chart, the export or reexport is deemed to be an export to the foreign country of which it is a territory, etc.

  • Is there an “X” in the box under that specific Reason for Control?? If so, there is a license requirement.


Ear99

EAR99

If an item subject to the EAR is NOT described by any ECCN, it is designated EAR99.

In most cases, the export of an EAR99 item can be completed using the license authorization NLR (No License Required),

but …

Check the General Prohibitions AND the “Lists to Check” for other possible licensing requirements.


Ten general prohibitions p art 736

TEN GENERAL PROHIBITIONSPart 736

DESCRIBE EXPORTS, REEXPORTS AND CONDUCT IN WHICH YOU MAY NOT ENGAGE WITHOUT A LICENSE, LICENSE EXCEPTION (IF AVAILABLE AND APPLICABLE) OR A DETERMINATION THAT A LICENSE IS NOT REQUIRED.


Ten general prohibitions part 736

Ten General ProhibitionsPart 736

  • General Prohibitions 1-10 apply to items having a specific ECCN

  • General Prohibitions 4-10 apply to items that are EAR99


Factors determining license requirements

FACTORS DETERMININGLICENSE REQUIREMENTS

1. WHAT IS THE PRODUCT?

2. WHERE IS THE PRODUCT GOING?

3. WHO IS THE END USER?

4. WHAT IS THE END-USE?


Bureau of industry and security department of commerce

LICENSE EXCEPTIONS

Part 740


Important concepts

Important Concepts

After determining “License Requirements,”

determine if there is an available mechanism for

OVERCOMING

that requirement.

This potential mechanism is called a

License Exception.


License exceptions part 740

License ExceptionsPart 740

Definition:An authorization that allows you to export or reexport, under stated conditions, items subject to the EAR that would otherwise require a license.

Each license exception bears a three letter symbol used for export clearance purposes.


Can you use a license exception

Can You Use a License Exception?

  • Review general restrictions (Section 740.2)

  • Identify all applicable License Exception(s)

    • List based and transaction based

    • Use least restrictive exception that is available

  • Each “X” (license requirement) must be overcome


Strategic trade authorization

Strategic Trade Authorization

  • Strategic Trade Authorization

    • July 2011 through December 2012

    • 105 companies have exported under STA

    • 1,231 shipments under STA

      • 41% (500) exports worth less than $2,500

    • $146.2 million worth of exports under STA


Strategic trade authorization1

Strategic Trade Authorization

  • Top STA product categories (ECCNs)

    • Optical sighting devices (0A987)

    • Cameras (6A003)

    • Components for the International Space Station (9A004)

    • Non-fluorinated polymeric substances (1C008)

    • Electronic components (3A001)


Strategic trade authorization sta section 740 20

Strategic Trade Authorization: STA(Section 740.20)

Authorizes the immediate export, reexport or transfer of most items to 36 specified countries AND the immediate export, reexport or transfer of many items to 8 additional countries.

Specifically excludes certain reasons for control AND certain specified ECCN’s in Categories 0, 1 and 9.

Review ALL individual ECCN entries for additional restrictions.


36 sta eligible countries multiple reasons for control ns cb np rs cc si

36 STA-Eligible CountriesMultiple Reasons for ControlNS, CB, NP, RS, CC, SI

Argentina

Australia

Austria

Belgium,

Bulgaria

Canada

Croatia

Czech Republic

Denmark

Estonia

Finland

France

Germany

Greece

Hungary

Iceland

Ireland

Italy

Japan

Latvia

Lithuania

Luxembourg

Netherlands

New Zealand

Norway

Poland

Portugal

Romania

Slovakia

Slovenia

South Korea

Spain

Sweden

Switzerland

Turkey

United Kingdom


8 sta eligible countries reasons for control ns only

8 STA-Eligible CountriesReasons for ControlNS ONLY

Malta

Singapore

South Africa

Taiwan

Albania

Hong Kong

India

Israel


Bureau of industry and security department of commerce

For assistance with

Encryption matters please contact the

BIS Encryption Hotline

1-202-482-0707


Bureau of industry and security department of commerce

Join us tomorrow as the Journey Continues.

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