BIS Issues Deemed Reexport Guidance

On October 31, 2013, the Bureau of Industry and Security (BIS) published new guidance on deemed reexports in light of the recent export control reform EAR and ITAR harmonization. 

In the guidance, BIS states that:

Many core EAR and ITAR terms and concepts were harmonized on October 15, 2013 -- the effective date of the first transfers of jurisdiction to the EAR of military items that are no longer identified on the ITAR’s U.S. Munitions List. Other terms and phrases will be harmonized over the course of 2014 as the departments publish amendments to the remaining categories of military items. However, the Administration has not yet proposed any rules that would harmonize, in whole or in part, the treatment in the EAR and ITAR of the release outside the United States of controlled technology/technical data or source code, – i.e., "deemed reexports" -- to dual and third country nationals.

 

A. Legacy BIS Dual and Third Country National Reexport Guidance

In general, you (e.g., an entity outside the United States) may reexport technology or source code subject to the EAR outside the United States to a dual or third country national without an additional license issued by BIS or the application of an EAR license exception if:

1. You are authorized to receive the technology or source code at issue, whether by an individual license, license exception, or situations where no license is required under the EAR for such technology or source code; and

2. You are certain that the foreign national’s most recent country of citizenship or permanent residency is either:

i. the same as yours (e.g., the same country in which your company outside the United States is located), or

ii. that of a country to which export from the United States of the technology or source code at issue would be authorized by the EAR either under a license exception, or in situations where no license under the EAR would be required.

If you are uncertain of the foreign national’s most recent country of citizenship or permanent residency and none of the other guidance from the provisions and guidance described below is applicable, you should seek guidance from BIS regarding whether a license or other authorization is required under the EAR to release technology or source code subject to the EAR to the dual or third country national.

A BIS license authorizing the release of technology to an entity also authorizes the release of the same technology to the entity’s dual and third country nationals who are permanent and regular employees of the entity’s facility or facilities authorized on the license, except to the extent a license condition limits or prohibits the release of the technology to nationals of specific countries or country groups.

B. Updated BIS Dual and Third Country National Guidance Consistent with ITAR Section 124.16

In general, you (e.g., an entity outside the United States) may release technology or source code subject to the EAR to a dual or third country national without an additional BIS license issued or the application of an EAR license exception if:

1. You are authorized to receive the technology or source code at issue, whether by an individual license, license exception, or through situations where no license is required under the EAR;

2. The dual or third country national is a bona fide regular and permanent employee directly employed by you; Date of Last Edit: October 31, 2013

3. Such employee is a national exclusively of countries that are member states of NATO or the European Union, Australia, Japan, New Zealand, or Switzerland; and

4. The release of technology or source code takes place completely within the physical territory of any such country.

C. Updated BIS Dual and Third Country National Guidance Consistent with ITAR Section 126.18

In general, you (e.g., an entity outside the United States) may release technology or source code subject to the EAR to a dual or third country national without an additional BIS license issued or the application of an EAR license exception if:

1. You are authorized to receive the technology or source code at issue, whether by an individual license, license exception, or situations where no license is required under the EAR;

2. The dual or third country national is a bona fide regular and permanent employee directly employed by you;

3. The release takes place completely within the physical territory of the country where you are located, conduct official business, or operate;

4. You have effective procedures to prevent diversion to destinations, entities, end users, and end uses contrary to the EAR; and

5. Any one of the following six (i.e., a, b, c, d, e, or f) situations is applicable:

a. the dual or third country national has a security clearance approved by the host nation government of the entity outside the United States;

b. the entity outside the United States:

i. has in place a process to screen the employee and to have the employee execute a non-disclosure agreement that provides assurances that the employee will not disclose, transfer, or reexport controlled technology contrary to the EAR or without an authorization issued by BIS;

ii. screens the employee for substantive contacts with countries listed in Country Group D:5;

iii. maintains a technology security or clearance plan that includes procedures for screening employees for such substantive contacts;

iv. maintains records of such screenings for the longer of five years or the duration of the individual’s employment with the entity;and

v. will make such plans and records available to BIS or its agents for civil and criminal law enforcement purposes upon request;

c. the entity is a UK entity implementing ITAR section 126.18 pursuant to the US-UK Exchange of Notes regarding ITAR section 126.18 for which the UK has provided appropriate implementation guidance, which can be found at:http://www.bis.gov.uk/assets/biscore/eco/docs/itar-rule-change/11-1337-question-and-answer-matrix-itar-rule-change.doc;

d. the entity is a Canadian entity implementing ITAR section 126.18 pursuant to the US-Canadian Exchange of Letters regarding ITAR section 126.18 for which Canada has provided appropriate implementation guidance, which can be found at : http://ssi-iss.tpsgc-pwgsc.gc.ca/dmc-cgd/bulletins/bulletin3-eng.html;

e. the entity is an Australian entity implementing the exemption at paragraph 3.7b of the ITAR Agreements Guidelines; or

f. the entity is a Dutch entity implementing the exemption at paragraph 3.7c of the ITAR Agreements Guidelines.