BIS Publishes Rule Based Upon a Systematic Review of the Commerce Control List
06/28/10 10:22 PM
On
June 28, 2010, the Bureau of Industry and Security
(BIS) published a final rule revising the
Export Administration Regulations (EAR) based
upon a systematic review of the Commerce Control
List (CCL).
The rule is the third phase of the regulatory implementation of the results of a review of the CCL that was conducted by BIS starting in 2007. The BIS review was aided by input received from BIS’s Technical Advisory Committees (TACs) and comments received from the interested public.
The revisions in this rule include clarifications to existing controls; eliminating redundant or outdated controls; and establishing more focused and rationalized controls. This rule also makes CCL related changes to other parts of the EAR, including CCL related definitions and license exceptions.
The rule is effective upon publication and while no formal comment period, BIS welcomes comments from the public on this rule on a continuing basis.
The rule is the third phase of the regulatory implementation of the results of a review of the CCL that was conducted by BIS starting in 2007. The BIS review was aided by input received from BIS’s Technical Advisory Committees (TACs) and comments received from the interested public.
The revisions in this rule include clarifications to existing controls; eliminating redundant or outdated controls; and establishing more focused and rationalized controls. This rule also makes CCL related changes to other parts of the EAR, including CCL related definitions and license exceptions.
The rule is effective upon publication and while no formal comment period, BIS welcomes comments from the public on this rule on a continuing basis.
Freight Forwarder Settles Allegation Of Antiboycott Violation
06/25/10 04:26 PM
On
June 25, 2010, the U.S. Department of Commerce’s
Bureau of Industry and Security (BIS)
announced that Plane
Cargo Inc. (PCI), a freight forwarder located in
Houston, TX, has agreed to pay a $5,200 civil
penalty to settle allegations that it violated
the antiboycott provisions of the Export
Administration Regulations (EAR).
The announcement provided that:
The announcement provided that:
BIS, through its Office of Antiboycott Compliance, alleged that on one occasion in 2003, PCI, in connection with a transaction involving the sale and transfer of goods from the United States to Syria, furnished an invoice to a company in Syria that certified that the goods were not of Israeli origin in violation of the antiboycott provisions of the EAR. PCI cooperated fully with the investigation.
BIS Seeks Comments on Revising Encryption Export Controls
06/25/10 12:27 PM
On
June 25, 2010, the Bureau of Industry and Security
(BIS) issued an interim final rule
that amends the
Export Administration Regulations (EAR) to
modify the requirements of License Exception
ENC, “Encryption Commodities, Software and
Technology,” and the requirements for qualifying
an encryption item as mass market. In addition,
the rule also amends specific license
requirements for encryption items. EAR sections
affected are 15 CFR Parts 730, 734, 738, 740,
742, 748, 772 and 774. BIS also posted on its
website a press
release, a
summary of the rule,
and additional information
to
assist exporters.
BIS believes that the rule will streamline procedures for (1) less sensitive encryption items eligible for export under License Exception ENC and (2) most mass market encryption products. The interim final rule also implements the Wassenaar Arrangement’s decontrol of items that perform “ancillary cryptography” in the Commerce Control List.
The rule includes several significant changes to encryption export controls by modifying the way information about encryption products is collected an analyzed. The rule, as amended:
Comments on the suggested changes are due by August 24, 2010.
BIS believes that the rule will streamline procedures for (1) less sensitive encryption items eligible for export under License Exception ENC and (2) most mass market encryption products. The interim final rule also implements the Wassenaar Arrangement’s decontrol of items that perform “ancillary cryptography” in the Commerce Control List.
The rule includes several significant changes to encryption export controls by modifying the way information about encryption products is collected an analyzed. The rule, as amended:
- Removes review requirements for less sensitive encryption items;
- Establishes a company registration requirement for encryption items under License Exception ENC or as mass market encryption items. Under the new rule, authorization for License Exception ENC and mass market treatment is based on company authorizations that operate like a bulk license for the company’s products rather than product-by-product authorizations;
- Creates an annual self-classification report requirement for such items pursuant to an encryption registration. Under the new rule, the self-classification report would be required to be submitted annually to BIS and the ENC Encryption Request Coordinator in February for items exported and reexported the previous calendar year;
- Makes encryption technology eligible for export and reexport under License Exception ENC, except to countries of highest concern;
- Lifts the semi-annual sales reporting for less sensitive encryption items under License Exception ENC. When sales reporting is not required under License Exception ENC, companies need only maintain records as required by the EAR that can be reviewed by appropriate agencies of the U.S. Government upon request;
- Removes the 30-day delay to export and reexport less sensitive encryption items under License Exception ENC; and
- Removes the
30-day delay to make most mass market encryption
items eligible for mass market treatment.
Comments on the suggested changes are due by August 24, 2010.
BIS Publishes Update 2010 Dates & Instructions
06/15/10 10:45 PM
The
Bureau of Industry and Security’s (BIS)
announced that its annual
Update Conference on Export Controls and Policy
will be held on August 31- September 2, 2010 in
Washington, DC.
To attend this year’s conference, you must follow a two-step process: (1) you must submit the online “Interest Form” between June 15 and June 28. If there are more potential participants than there is space available, BIS will grant registration through a random selection from the entire list of respondents, regardless of when received during the period. Those selected will be notified and given registration instructions in early July. They must register and submit payment by a designated date indicated in the instructions or their spot will be forfeited and given to someone on the wait list. Those not selected will be notified that they have been placed on a wait list.
More detailed program information will be posted in the coming weeks.
Registration transfers within companies or organizations may be permitted with prior approval from BIS. Registration transfers will not be permitted between different organizations or companies. Registrations may not be resold.
BIS will make every effort to ensure broad company representation at this event. Due to the limited capacity of the Update Conference, BIS reserves the right to limit, restrict or decline registrations to this event. Registrations are not confirmed until accepted and verified by BIS and the registration fee has been paid.
To attend this year’s conference, you must follow a two-step process: (1) you must submit the online “Interest Form” between June 15 and June 28. If there are more potential participants than there is space available, BIS will grant registration through a random selection from the entire list of respondents, regardless of when received during the period. Those selected will be notified and given registration instructions in early July. They must register and submit payment by a designated date indicated in the instructions or their spot will be forfeited and given to someone on the wait list. Those not selected will be notified that they have been placed on a wait list.
More detailed program information will be posted in the coming weeks.
Registration transfers within companies or organizations may be permitted with prior approval from BIS. Registration transfers will not be permitted between different organizations or companies. Registrations may not be resold.
BIS will make every effort to ensure broad company representation at this event. Due to the limited capacity of the Update Conference, BIS reserves the right to limit, restrict or decline registrations to this event. Registrations are not confirmed until accepted and verified by BIS and the registration fee has been paid.
Texas Company Settles Allegations Of Antiboycott Violations
06/14/10 04:21 PM
On
June 14, 2010, the U.S. Department of Commerce’s
Bureau of Industry and Security (BIS)
announced that Messina,
Inc. (Messina) of Dallas, TX, has agreed to pay
a $10,800 civil penalty to settle allegations
that it violated the antiboycott provisions of
the Export Administration Regulations (EAR) on
two occasions.
The announcement provided that:
The announcement provided that:
BIS, through its Office of Antiboycott Compliance, alleged that in 2004, in connection with two letter of credit transactions involving the sale and transfer of goods destined for Iraq that were shipped through the UAE, Messina furnished to a U.S. bank two certificates signed by the agent for a vessel that attested to the vessel’s eligibility to call at the port of a boycotting country. In doing so, Messina furnished information concerning other persons known or believed to be restricted from having any business relationship with or in a boycotting country, in violation of the antiboycott provisions of the EAR.
BIS Clarifies De Minimis Content Requirements in the EAR
06/04/10 10:33 AM
On
June 4, 2010, Bureau of Industry and Security (BIS)
issued a final rule in Federal
Register that clarifies language concerning
the de
minimis provisions in
the Export Administration Regulations (EAR).
The EAR generally do not apply to items that were made and are located outside the U.S. and that contain only a “de minimis” level of U.S-origin content. The procedures for calculating whether an item exceeds the de minimis threshold note that the calculation is appropriate only for items that are made outside the U.S. and are not currently in the U.S.
Effective June 4, 2010, the rule removes EAR provision in §734.3(b)(4), which outlines a category of items not subject to the EAR (“foreign made items that have less than the de minimis percentage of controlled U.S. content&rdquo
, because the provision could be
erroneously read as applying the de minimis
exclusion to foreign made items that are
located in the U.S.
In addition, the final rule provides technical corrections to the EAR involving certain performance criteria of turning machines and the rule also removes obsolete cross references, removes and reserves two regulatory provisions,
corrects a typographical error, and removes an unnecessary reporting
requirement.
The EAR generally do not apply to items that were made and are located outside the U.S. and that contain only a “de minimis” level of U.S-origin content. The procedures for calculating whether an item exceeds the de minimis threshold note that the calculation is appropriate only for items that are made outside the U.S. and are not currently in the U.S.
Effective June 4, 2010, the rule removes EAR provision in §734.3(b)(4), which outlines a category of items not subject to the EAR (“foreign made items that have less than the de minimis percentage of controlled U.S. content&rdquo
, because the provision could be
erroneously read as applying the de minimis
exclusion to foreign made items that are
located in the U.S.
In addition, the final rule provides technical corrections to the EAR involving certain performance criteria of turning machines and the rule also removes obsolete cross references, removes and reserves two regulatory provisions,
corrects a typographical error, and removes an unnecessary reporting
requirement.
BIS Publishes Final Rule Adding a Validated End-User for the PRC
01/15/10 01:09 AM
On
January 15, 2010, the Bureau of Industry and
Security (BIS) published a final rule to
add an entity to the list of validated end-users
for the Peoples' Republic of China (PRC)
approved to receive exports, reexports, and
transfers of certain items under Authorization
Validated End-User (VEU). Specifically, this
rule amends the EAR to add one additional
validated end-user and identifies eligible items
for export and reexport and transfer
(in-country) to one facility in the PRC.
BIS Launches Online Export Tracking System
01/12/10 09:40 PM
On
January 11, 2010, the Bureau of Industry and
Security (BIS) launched an online version of its
System for Tracking Export License Applications
(STELA). STELA allows users to
check the status of their export and re-export
license applications, classification requests
and agricultural license exception (AGR)
notifications. To access export data, STELA
users must input their application control
number (ACN) assigned by BIS.
With the launch of an online system, BIS plans to eventually phase out the phone-based STELA.
With the launch of an online system, BIS plans to eventually phase out the phone-based STELA.
BIS Updates Freight Forwarder Guidance
01/08/10 01:14 AM
On
January 7, 2010, the Bureau of Industry and
Security (BIS) updated its online guidance for freight
forwarders.
BIS Amends EAR per Wassenaur Revisions
12/11/09 10:38 PM
The
Bureau of Industry and Security (BIS) issued
a final rule in the Federal
Register stating that, effective December 11,
2009, revises the Export Administration
Regulations (EAR) to implement changes to the
Wassenaar Arrangement’s List of Dual-Use Goods
and Technologies. The changes were agreed upon
by participating countries during Wassenaur
Arrangement’s plenary session in December 2010.
The U.S., as a participating member of the
Wassenaur Arrangement, must modify the Commerce
Control List (CCL) in order to incorporate these
changes.
The final rule amends CCL categories 1, 2, 3, 4, 5 (Parts 1 and 2), 6, 7, 8 and 9, as well as Definitions and Reports sections.
Detailed changes to CCL can be accessed here.
The final rule amends CCL categories 1, 2, 3, 4, 5 (Parts 1 and 2), 6, 7, 8 and 9, as well as Definitions and Reports sections.
Detailed changes to CCL can be accessed here.
BIS Finalizes Encryption Simplification Rule
10/15/09 01:47 PM
On
October 15, 2009, the Bureau of Industry and
Security (BIS) published the Final Encryption Simplification
Rule in the Federal
Register. BIS had published the interim final
rule entitled "Encryption Simplification" on
October 3, 2008 (73 Fed. Reg. 57,495). This rule
finalizes that rule, corrects errors published
in the October 3, 2008 interim final rule, and
resolves inconsistencies in that rule identified
by the public.
Among other things, the October 3, 2008 interim final rule removed section 744.9 of the EAR, which set forth requirements for authorization from BIS for U.S. persons to provide technical assistance to foreign persons with the intent to aid a foreign perosn in the development or manufacture outside the U.S. of encryption commodities or software that, if of U.S.-origin, would be "EI" controlled under ECCNs 5A002 or 5D002. Although the interim final rule removed section 744.9, other parts of the EAR that referred to that section were inadvertently not removed. The final rule removes those sections and makes other corrections to harmonize with revisions made in the October 3, 2008 interim final rule. Finally, some revisions in the final rule are the results of requests for clarification from the public on the October 3, 2008 encryption simplification rule.
Among other things, the October 3, 2008 interim final rule removed section 744.9 of the EAR, which set forth requirements for authorization from BIS for U.S. persons to provide technical assistance to foreign persons with the intent to aid a foreign perosn in the development or manufacture outside the U.S. of encryption commodities or software that, if of U.S.-origin, would be "EI" controlled under ECCNs 5A002 or 5D002. Although the interim final rule removed section 744.9, other parts of the EAR that referred to that section were inadvertently not removed. The final rule removes those sections and makes other corrections to harmonize with revisions made in the October 3, 2008 interim final rule. Finally, some revisions in the final rule are the results of requests for clarification from the public on the October 3, 2008 encryption simplification rule.
Exporter Settles Allegations of EAR Violations & Agrees to $190,000 Penalty
08/15/09 08:40 PM
On
August 14, 2009, the Commerce Department’s Bureau
of Industry and Security (BIS) announced that RF Micro
Devices, Inc. (RFMD) of Greensboro, N.C. has
agreed to pay a $190,000 civil penalty to settle
allegations that it exported spread-spectrum
modems in violation of the Export Administration
Regulations (EAR) to China. In addition, Carol
Wilkins, RFMD manager whose responsibilities, at
the time of the violations, included export
control compliance, has agreed to pay a civil
penalty in the amount of $15,000 for making
false and misleading statements to BIS Special
Agents during the investigation.
The allegations involved fourteen unlicensed exports of spread-spectrum modems, classified under Export Control Classification Number 5A001 and controlled for national security reasons, to China with knowledge that a violation of the Regulations was occurring, was about to occur or was intended to occur in connection with the spread-spectrum modems. Additionally, BIS alleged that on thirteen occasions RFMD made false or misleading statements about the submission of Shipper’s Export Declarations (SEDs).
RFMD voluntarily disclosed the violations that occurred in 2002 and 2003.
The allegations involved fourteen unlicensed exports of spread-spectrum modems, classified under Export Control Classification Number 5A001 and controlled for national security reasons, to China with knowledge that a violation of the Regulations was occurring, was about to occur or was intended to occur in connection with the spread-spectrum modems. Additionally, BIS alleged that on thirteen occasions RFMD made false or misleading statements about the submission of Shipper’s Export Declarations (SEDs).
RFMD voluntarily disclosed the violations that occurred in 2002 and 2003.
BIS Posts Interest Form for BIS Update 2009 Conference
06/30/09 03:33 PM
On June 29, 2009, the Bureau of Industry and
Security (BIS) posted
details
on its Update 2009 Conference to be held from
September 30 - October 2, 2009 in Washington, D.C.
Interested parties must follow a two-step process to attend this year’s conference. First, you must submit the online “Interest Form” between June 25 and July 17, 2009. If there are more potential participants than there is space available, BIS will grant registration through a random selection from the entire list of respondents, regardless of when received during the period. Those selected will be notified and given registration instructions in late July. They must register and submit payment by a designated date indicated in the instructions or their spot will be forfeited and given to someone on the wait list.
Those not selected will be notified that they have been placed on a wait list. More detailed program information will be posted in the coming weeks.
Registration transfers within companies or organizations may be permitted with prior approval from BIS. Registration transfers will not be permitted between different organizations or companies. Registrations may not be resold.
Interested parties must follow a two-step process to attend this year’s conference. First, you must submit the online “Interest Form” between June 25 and July 17, 2009. If there are more potential participants than there is space available, BIS will grant registration through a random selection from the entire list of respondents, regardless of when received during the period. Those selected will be notified and given registration instructions in late July. They must register and submit payment by a designated date indicated in the instructions or their spot will be forfeited and given to someone on the wait list.
Those not selected will be notified that they have been placed on a wait list. More detailed program information will be posted in the coming weeks.
Registration transfers within companies or organizations may be permitted with prior approval from BIS. Registration transfers will not be permitted between different organizations or companies. Registrations may not be resold.
BIS Issues Final Rule on Certain Thermal Imaging Cameras
05/22/09 10:08 PM
On May
22, 2009, the Bureau of Industry and Security (BIS)
published a final rule in the Federal
Register revising the license requirements and
license exception eligibility for certain
thermal imaging cameras and foreign made
military commodities incorporating such cameras.
The rule imposes a license requirement for certain exports and reexports of military commodities manufactured outside the United States that are not subject to the International Traffic in Arms Regulations (ITAR), regardless of the level of U.S.-origin content, if those military commodities incorporate certain thermal imaging cameras that are subject to the Export Administration Regulations (EAR).
The rule also removes Commerce Control List (CCL) based export and reexport license requirements with respect to 36 destinations for certain thermal imaging cameras when they are not incorporated into military commodities and if they are not being exported or reexported to be embedded in a civil product. It imposes a semi-annual reporting requirement on the transactions from which it removes the CCL based license requirements.
The rule also imposes a license requirement for software used to increase the frame rate of certain cameras.
BIS states that it is making these changes in recognition of the emerging availability of these cameras around the world, the export licensing practices of other governments and the potential use of these cameras in military applications.
The rule imposes a license requirement for certain exports and reexports of military commodities manufactured outside the United States that are not subject to the International Traffic in Arms Regulations (ITAR), regardless of the level of U.S.-origin content, if those military commodities incorporate certain thermal imaging cameras that are subject to the Export Administration Regulations (EAR).
The rule also removes Commerce Control List (CCL) based export and reexport license requirements with respect to 36 destinations for certain thermal imaging cameras when they are not incorporated into military commodities and if they are not being exported or reexported to be embedded in a civil product. It imposes a semi-annual reporting requirement on the transactions from which it removes the CCL based license requirements.
The rule also imposes a license requirement for software used to increase the frame rate of certain cameras.
BIS states that it is making these changes in recognition of the emerging availability of these cameras around the world, the export licensing practices of other governments and the potential use of these cameras in military applications.
BIS Removes T 37 Jet Trainer and Aircraft Parts from CCL
05/06/09 04:57 PM
On May
6, 2009, the Bureau of Industry and Security (BIS)
published a final rule in the Federal
Register, which removes the T 37 jet trainer
aircraft and specially designed parts from under
the Department of Commerce’s licensing
jurisdiction on the Commerce Control List (CCL).
In the final rule, BIS states that although the T 37 jet trainer aircraft appear on the CCL, the Department of State, Directorate of Defense Trade Controls (DDTC) reviews license applications for these aircraft and parts. Accordingly, BIS is removing the T 37 jet trainer aircraft from the CCL to “avoid potentially overlapping coverage and reduce the possibility of confusion by the public.”
In the final rule, BIS states that although the T 37 jet trainer aircraft appear on the CCL, the Department of State, Directorate of Defense Trade Controls (DDTC) reviews license applications for these aircraft and parts. Accordingly, BIS is removing the T 37 jet trainer aircraft from the CCL to “avoid potentially overlapping coverage and reduce the possibility of confusion by the public.”
BIS Approves Additional VEU
05/01/09 09:31 PM
On
April 29, 2009, the Bureau of Industry and Security
(BIS) published a final rule in the Federal
Register, which adds a name to the list of
end-users for the Peoples’ Republic of China
(PRC) approved to receive exports, reexports,
and transfers of certain items under the
authorization Validated End-User (VEU). The rule
also amends the Export Administration
Regulations (EAR) to add and revise eligible
items and destinations for existing VEU
authorizations.
The VEU authorization is a mechanism to facilitate increased high-technology exports to companies in the PRC and India that have a record of using such items responsibly. VEUs may obtain eligible items on the Commerce Control List (CCL) without having to wait for their suppliers to obtain export licenses from BIS. In addition to U.S. exporters, VEU authorization may be used by foreign reexporters, and does not have an expiration date.
The final rule amends Supplement No. 7 to Part 748 of the EAR to identify an additional company with eligible facilities in the PRC as a VEU and to identify the items that may be exported, reexported, or transferred under Authorization VEU. The new entry is for Aviza Technology China and lists Export Control Classification Numbers (ECCNs) 2B230, 3B001.c.1.a. and 3B001.e.
The VEU authorization is a mechanism to facilitate increased high-technology exports to companies in the PRC and India that have a record of using such items responsibly. VEUs may obtain eligible items on the Commerce Control List (CCL) without having to wait for their suppliers to obtain export licenses from BIS. In addition to U.S. exporters, VEU authorization may be used by foreign reexporters, and does not have an expiration date.
The final rule amends Supplement No. 7 to Part 748 of the EAR to identify an additional company with eligible facilities in the PRC as a VEU and to identify the items that may be exported, reexported, or transferred under Authorization VEU. The new entry is for Aviza Technology China and lists Export Control Classification Numbers (ECCNs) 2B230, 3B001.c.1.a. and 3B001.e.
BIS Updates Information and FAQs on Entity List
04/17/09 04:09 PM
On
April 17, 2009, the Bureau of Industry and Security
(BIS) updated information and its
FAQs regarding the
Entity List on its website. BIS describes
the Entity List as follows:
The Export Administration Regulations (EAR) contain a list of names of certain foreign persons – including businesses, research institutions, government and private organizations, individuals, and other types of legal persons – that are subject to specific license requirements for the export, reexport and/or transfer (in-country) of specified items. These persons comprise the Entity List, which is found in Supplement No. 4 to Part 744 of the EAR. On an individual basis, the persons on the Entity List are subject to licensing requirements and policies supplemental to those found elsewhere in the EAR.
Exporter Charged With Violations of U.S. Export Regulations and False Statements to Government Agency
04/06/09 03:31 PM
On
April 6, 2009, the Department of Justice
(DOJ) announced
that federal
grand jury sitting in San Jose, California,
indicted Fu-Tain Lu (Lu), Funshine Technology,
Inc. (Funshine), and Everjet Science and
Technology Corporation (Everjet), charging them
with conspiracy to violate U.S. export
regulations and with lying to federal agents
investigating Lu’s conduct.
Funshine, based in Cupertino, California, and Everjet, based in China, were founded by Lu. The indictment alleges that Lu and his two companies conspired to export sensitive microware amplifier technology to China without obtaining the required licenses or authorization from the U.S. Department of Commerce. Items that Funshine shipped and attempted to ship to China were restricted for reasons of national security.
The indictment details that the defendants knew about the licensing restrictions but chose not to comply. Charges against Lu and the companies are supported, in part, by using internal company e-mails in which an Everjet employee told a Funshine employee, “Since these products are a little bit sensitive, in case the maker asks you where the location of the end user is, please do not mention it is in China.” In another e-mail, Lu advised an employee to pretend that the intended end-user for the goods was in Singapore, not China.
Lu, as an individual defendant, faces five years imprisonment and a $250,000 fine (or, twice the gross financial gain from the offense) on each of the counts of conspiracy to violate export regulations and false statements to a government agency; for charges of violation of export regulations, the statutory maximum penalty is 10 years imprisonment and a $50,000 fine, or twice the gross gain from the offense.
Funshine, based in Cupertino, California, and Everjet, based in China, were founded by Lu. The indictment alleges that Lu and his two companies conspired to export sensitive microware amplifier technology to China without obtaining the required licenses or authorization from the U.S. Department of Commerce. Items that Funshine shipped and attempted to ship to China were restricted for reasons of national security.
The indictment details that the defendants knew about the licensing restrictions but chose not to comply. Charges against Lu and the companies are supported, in part, by using internal company e-mails in which an Everjet employee told a Funshine employee, “Since these products are a little bit sensitive, in case the maker asks you where the location of the end user is, please do not mention it is in China.” In another e-mail, Lu advised an employee to pretend that the intended end-user for the goods was in Singapore, not China.
Lu, as an individual defendant, faces five years imprisonment and a $250,000 fine (or, twice the gross financial gain from the offense) on each of the counts of conspiracy to violate export regulations and false statements to a government agency; for charges of violation of export regulations, the statutory maximum penalty is 10 years imprisonment and a $50,000 fine, or twice the gross gain from the offense.
BIS Requests Comments on the Utilization Rate of BIS Licenses
03/21/09 05:22 PM
On
March 20, 2009, the Bureau of Industry and Security
(BIS) published a
request
for public comments on the utilization
rate of BIS licenses. Comments must be received no
later than May 4, 2009.
In the notice, BIS states:
BIS requests information to help it determine specifically:
The scope of this inquiry is limited to export licenses. It does not encompass reexports, deemed exports or deemed reexports.
The following kinds of information would be useful to BIS's assessment:
In the notice, BIS states:
A significant percentage of the export licenses issued by theBureau of Industry and Security (BIS) appear to be unused or used for less than the quantity or value limits authorized by the license. BIS seeks public comment to help it ascertain the reasons for such lack of use or under use. BIS is particularly interested in whether characteristics of the export license application review process induce applicants to apply for greater authorizations than they need and, if such is the case, any costs associated with such applications.
BIS requests information to help it determine specifically:
- Whether software and technology export licenses also are not used or are underused;
- The reasons that export licenses sometimes are not used or are underused; and
- Whether characteristics of the export licensing process (e.g., ease or difficulty of use, processing times, degree of communication between the government and the applicant, license conditions, etc.) contribute to the practice of not using or under-using export licenses.
The scope of this inquiry is limited to export licenses. It does not encompass reexports, deemed exports or deemed reexports.
The following kinds of information would be useful to BIS's assessment:
- Whether exporters seek an export license prior to receipt of a purchase order or letter of intent, and examples of typical business cases for seeking a license absent such documentation;
- Detailed information concerning instances when exporters have obtained an export license from BIS but then did not use it or used it for less than the quantity or value authorized, including information on whether the export licensing process impacted the transaction, whether sales were lost due to the licensing process and the dollar amount of any such lost sales that are directly attributable to the licensing process;
- Specific information about whether licenses for the export of software or technology are not used or are under used;
- Whether an extension of the validity period of export licenses issued by BIS would increase the probability of the utilization of licenses; and
- Process improvements that BIS could make to enhance the utilization of export licenses (e.g., expedited treatment for applications under specific circumstances).
BIS Posts Notice on Transfer of Export Licenses
02/11/09 05:29 PM
On
February 10, 2009, the Bureau of Industry and
Security posted a notice
on its
website regarding the transfer of licenses. The
notice stated the following:
Under the Export Administration Regulations (EAR), BIS issues individual export licenses to parties. In some instances, ownership of the party/licensee changes due to mergers and acquisitions. This may result in a change to the license if the party to whom the license was issued no longer exists, or is no longer engaged in exporting. The EAR contains a procedure under Section 750.10 that provides for the transfer of export licenses in such circumstances. Persons planning corporate mergers, transfers, or acquisitions should consider whether any existing export licenses will need to be transferred and should consult Section 750.10(b) which provides detailed instructions. Please note that the transfer of an export license must be requested by the licensee, therefore, any request for a transfer of a license that is the result of a corporate transaction in which the licensee will cease to exist as a legal entity must be made prior to the licensee ceasing to exist.
California & Taiwan Companies Lose Export Privileges for 20 Years
02/07/09 05:30 PM
On
February 6, 2009, the Bureau of Industry and
Security (BIS)
announced that Well Being
Enterprise Co., Ltd. ("Well Being") of Taiwan and
Elecmat, Inc. of San Francisco, CA settled
allegations and each agreed to 20 year denials of
export privileges. Well Being also agreed to a
civil penalty of $250,000 to settle allegations
that it committed 25 violations of the Export
Administration Regulations (EAR) related to the
unlicensed export of chemicals and metals from the
United States to Taiwan that are controlled for
Nuclear Proliferation reasons. In addition, Hui-Fen
Chen, a Well Being employee, has agreed to a
twenty-year denial of export privileges for items
on the Commerce Control List (CCL), and Theresa
Chang, Elecmat’s former manger, has agreed to a
two-year denial of export privileges for items on
the CCL.
The denial orders imposed against Well Being, Chen and Chang prohibit them from participating in, or benefiting from, any transaction involving the export of an item listed on the CCL. The denial order imposed against Elecmat prohibits it from participating in, or benefiting from, any transaction involving the export of all items subject to the EAR. BIS has agreed to suspend $220,000 of Well Being’s fine, provided that, in the next five years, no additional violations occur.
Kevin Delli-Colli, Acting Assistant Secretary of Commerce for Export Enforcement stated that, "Individuals who devise schemes and willfully circumvent U.S. export controls warrant having their export privileges suspended. This case demonstrates that domestic sales of controlled items to persons with no technical understanding of the product should be considered a red-flag."
The denial orders imposed against Well Being, Chen and Chang prohibit them from participating in, or benefiting from, any transaction involving the export of an item listed on the CCL. The denial order imposed against Elecmat prohibits it from participating in, or benefiting from, any transaction involving the export of all items subject to the EAR. BIS has agreed to suspend $220,000 of Well Being’s fine, provided that, in the next five years, no additional violations occur.
Kevin Delli-Colli, Acting Assistant Secretary of Commerce for Export Enforcement stated that, "Individuals who devise schemes and willfully circumvent U.S. export controls warrant having their export privileges suspended. This case demonstrates that domestic sales of controlled items to persons with no technical understanding of the product should be considered a red-flag."
BIS Seeks Public Comments on Effects of Export Controls on Decisions to Use or Not Use U.S.-Origin Parts or Components
01/30/09 05:34 PM
On
January 5, 2009, the Bureau of Industry and
Security (BIS) published a
notice
in the
Federal Register seeking public comments on whether
U.S. export controls influence manufacturers'
decisions to use or not use U.S.-origin parts and
components in commercial products and the effects
of such decisions. In the notice, BIS states that
it "is interested in obtaining specific information
about whether such a practice occurs, and if so,
its economic effects in order to assess the
effectiveness of export controls as well as the
impact of export controls on the U.S. economy.
Comments must be received no later than February 19, 2009.
Comments must be received no later than February 19, 2009.
BIS Announces Full Implementation of VEU Program
01/14/09 05:36 PM
On
January 13, 2009, the Bureau of Industry and
Security (BIS)
announced the full
implementation of the Validated End-User (VEU)
program for the People’s Republic of China. The VEU
program, which allows certain exports from the U.S.
to "validated end users" in China to be exported
without individual export licenses.
The VEU program has been under fire from groups such as the Wisconsin Project on Nuclear Arms Controls. However, BIS has announced that it has reached agreement with the government of China to allow on-site visits by BIS officials of VEUs in China.
BIS issued the following press release:
WASHINGTON, D.C. – The Bureau of Industry and Security (BIS) today announced the full implementation of the Validated End-User (VEU) program for the People’s Republic of China. With agreement on procedures to ensure the program’s secure and efficient operation, civilian U.S.-China high-technology trade will benefit from the continued export of certain products to VEU-approved companies without individual licenses. The VEU program facilitates civilian trade by reducing administrative and logistical hurdles for certain exports to pre-screened companies in China.
“We are pleased to have reached this milestone agreement with China, one of our nation’s most important trading partners,” Under Secretary of Commerce Mario Mancuso said. “This agreement will maximize the security and trade-enhancing benefits of the VEU program, and continue a promising chapter in civilian U.S.-China high technology trade. U.S. exporters now have a more streamlined way to export to companies in China who have a record of using U.S. technology responsibly.”
Established in 2007, the VEU program uses a market-based approach to facilitate civilian high-technology trade with China. The program permits civilian companies in China, who pass a rigorous national security review and agree to strict follow-on compliance obligations, to receive under a VEU-specific authorization the same U.S.-controlled items they could previously receive under individual Commerce Department licenses.
The VEU program has been under fire from groups such as the Wisconsin Project on Nuclear Arms Controls. However, BIS has announced that it has reached agreement with the government of China to allow on-site visits by BIS officials of VEUs in China.
BIS issued the following press release:
WASHINGTON, D.C. – The Bureau of Industry and Security (BIS) today announced the full implementation of the Validated End-User (VEU) program for the People’s Republic of China. With agreement on procedures to ensure the program’s secure and efficient operation, civilian U.S.-China high-technology trade will benefit from the continued export of certain products to VEU-approved companies without individual licenses. The VEU program facilitates civilian trade by reducing administrative and logistical hurdles for certain exports to pre-screened companies in China.
“We are pleased to have reached this milestone agreement with China, one of our nation’s most important trading partners,” Under Secretary of Commerce Mario Mancuso said. “This agreement will maximize the security and trade-enhancing benefits of the VEU program, and continue a promising chapter in civilian U.S.-China high technology trade. U.S. exporters now have a more streamlined way to export to companies in China who have a record of using U.S. technology responsibly.”
Established in 2007, the VEU program uses a market-based approach to facilitate civilian high-technology trade with China. The program permits civilian companies in China, who pass a rigorous national security review and agree to strict follow-on compliance obligations, to receive under a VEU-specific authorization the same U.S.-controlled items they could previously receive under individual Commerce Department licenses.
BIS 4th Annual Export Control Forum in Newport Beach, CA Registration Opens
01/12/09 05:37 PM
BIS
has opened
registration for its 4th Annual
Export Control Forum in Newport Beach, CA to be
held on March 16, 2009 with a Special Topic on
March 17, 2009. BIS states:
The Export Control Forum is a full-day program designed to cover recent developments in export control regulations and policies. The one-day format provides a cost-effective way for the export control professional to hear about the latest in the export control field and to interact with key BIS management, licensing, and policy people. The Export Control Forum will conclude with a gala reception, offering you the opportunity to mingle and discuss issues of concern with the presenters and other participants.
BIS will also conduct two, half-day, Special Topics sessions on the day following the Forum, on March 17, 2009 for those who would like in-depth coverage on issues of interest. This year we will conduct one program on Technology Licensing and another on Encryption Controls. These sessions are independent and are scheduled to run concurrently.
For those of you who have requested an Update-like offering on the west coast, this is it! The streamlined, day or day-and-a-half format is intended to provide great value in a package that fits into your busy schedule. Please act quickly as space is limited.
BIS Update 2008 Web Portal containing Video Recordings Now Available
01/11/09 05:39 PM
The
Bureau of Industry and Security (BIS) recently
announced the launch of a new web portal with video
recordings of the past BIS Update 2008 conference.
The
web portal features
the
video recordings and speaker
presentations from the Update
2008 conference, as well as the
conference handout.
BIS Seeks Public Comments on Foreign Produced Items Made from U.S.-Origin Encryption Technology or Software
01/07/09 05:40 PM
On
January 6, 2009, the Bureau of Industry and
Security (BIS) published a
notice
in the
Federal Register requesting public comments on the
appropriate extent and scope of U.S. export
controls on foreign products that are the direct
products of U.S.-origin encryption technology or
software. BIS is seeking information on the
potential impact of controlling such foreign made
items for Encryption Items (EI) reasons under the
Export Administration Regulations (EAR) (i.e.,
those items classified under ECCN 5A002 or 5D002).
Specifically, BIS is requesting comments regarding the impact this control would have on both U.S. exporters of encryption technology/software and foreign manufacturers of products that are derived in whole or in part from U.S.-origin encryption technology or software.
Comments must be received by BIS no later than March 9, 2009.
Specifically, BIS is requesting comments regarding the impact this control would have on both U.S. exporters of encryption technology/software and foreign manufacturers of products that are derived in whole or in part from U.S.-origin encryption technology or software.
Comments must be received by BIS no later than March 9, 2009.
BIS Issues Final Rule with Conforming Changes to End-User/End Use Based Controls and Clarification of Terms
11/18/08 12:40 AM
On
November 18, 2008, the Bureau of Industry and
Security (BIS) published a final rule in the Federal
Register amending the Export Administration
Regulations (EAR) by making conforming changes
in certain end-user/end-use controls in the EAR
to ensure that the terminology used to describe
each type of end-user/end-use control is
consistent, to the fullest extent possible, with
the terminology in such other controls in the
EAR. In addition, the final rule amends the EAR
by revising the definition of the term
"transfer" and certain related terms, to provide
greater clarity regarding these provisions.
With regard to the end-user/end-use conforming changes, BIS states that the amendments clarify that a party cannot proceed with an export, reexport, or transfer (in-country) that is in transit at the time the party is informed by BIS that a license is required (in accordance with certain end-user/end-use controls in the EAR), unless that party first obtains a license from BIS authorizing the completion of the transaction. These changes are intended to enhance the ability of BIS to stop items subject to the EAR, including items not on the CCL, from being exported, reexported or transferred when there is an unacceptable risk that such items will be used in, or diverted to, any of the proliferation activities specified in certain sections of the EAR.
With regard to the end-user/end-use conforming changes, BIS states that the amendments clarify that a party cannot proceed with an export, reexport, or transfer (in-country) that is in transit at the time the party is informed by BIS that a license is required (in accordance with certain end-user/end-use controls in the EAR), unless that party first obtains a license from BIS authorizing the completion of the transaction. These changes are intended to enhance the ability of BIS to stop items subject to the EAR, including items not on the CCL, from being exported, reexported or transferred when there is an unacceptable risk that such items will be used in, or diverted to, any of the proliferation activities specified in certain sections of the EAR.
BIS Requests Public Comments on Removing Category 7A Products from De Minimis Eligibility
11/14/08 11:14 PM
On
November 14, 2008, the Bureau of Industry and
Security (BIS) announced in the Federal
Register that it is seeking public comments on
the prospect of removing from de minimis
eligibility commodities controlled for missile
technology (MT) reasons under Category 7 -
Product Group A on the Commerce Control List
(CCL) except when the 7A commodities are
incorporated as standard equipment in Federal
Aviation Administration (FAA) (or national
equivalent) certified civilian transport
aircraft.
BIS states that it specifically is seeking public input on the impact the proposed change would have on U.S. manufacturers of Category 7A commodities, as well as the impact such a change would have on foreign manufacturers that incorporate U.S.-origin 7A commodities into their foreign-made products.
Comments must be received no later than January 20, 2009.
BIS states that it specifically is seeking public input on the impact the proposed change would have on U.S. manufacturers of Category 7A commodities, as well as the impact such a change would have on foreign manufacturers that incorporate U.S.-origin 7A commodities into their foreign-made products.
Comments must be received no later than January 20, 2009.
BIS to Hold Public Meeting on Proposed Intra-Company Transfer (ICT) Rule
10/21/08 10:01 PM
On
October 27, 2008, the Commerce Department's Bureau
of Industry and Security (BIS) will hold a
public meeting to discuss its
proposed rule on the Intra-Company Transfer (ICT)
license exception. The meeting will be held at 9:00
am in Room 4830 of the Herbert C. Hoover Building
in Washington, D.C. on October 27, 2008.
BIS Implements Wassenaar Arrangement Changes to Export Administration Regulations
10/14/08 11:47 PM
On October 14, 2008, the U.S. Department of
Commerce’s Bureau of Industry and Security (BIS)
issued
a final rule
in the Federal Register revising the Export
Administration Regulations (EAR) to implement
changes made to the Wassenaar Arrangement’s List of
Dual Use Goods and Technologies and Munitions
(Wassenaar List).
The Wassenaar List is maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies (Wassenaar Arrangement).
This final rule revises the EAR by amending certain entries that are controlled for national security reasons. Specifically, entries in Categories 1, 2, 3, 5 Part I (telecommunications), Category 5 Part II (information security), and Categories 6, 7, and 9 were amended, and new entries were added to the Commerce Control List (CCL).
The final rule also increases unilateral U.S. export controls on certain items to make them consistent with the amendments made to implement the Wassenaar Arrangement’s decisions.
Although this rule is effective immediately, shipments that were on dock prepared for loading or those that were en route to a port of export on October 14, 2008, may proceed to that destination under the previous license requirements as long as they are exported from the United States before December 15, 2008. Items not exported before the December 15, 2008 deadline will require a license under the new regulations.
The Wassenaar List is maintained and agreed to by governments participating in the Wassenaar Arrangement on Export Controls for Conventional Arms and Dual Use Goods and Technologies (Wassenaar Arrangement).
This final rule revises the EAR by amending certain entries that are controlled for national security reasons. Specifically, entries in Categories 1, 2, 3, 5 Part I (telecommunications), Category 5 Part II (information security), and Categories 6, 7, and 9 were amended, and new entries were added to the Commerce Control List (CCL).
The final rule also increases unilateral U.S. export controls on certain items to make them consistent with the amendments made to implement the Wassenaar Arrangement’s decisions.
Although this rule is effective immediately, shipments that were on dock prepared for loading or those that were en route to a port of export on October 14, 2008, may proceed to that destination under the previous license requirements as long as they are exported from the United States before December 15, 2008. Items not exported before the December 15, 2008 deadline will require a license under the new regulations.
An Update from BIS Update 2008
10/02/08 10:24 PM
The
Department of Commerce's Bureau of Industry and
Security (BIS) held its annual update conference in
Washington, DC from September 29 - October 1, 2008.
Global Trade Expertise were there and here is a
short summary of key highlights from the event:
- BIS videotaped all of the sessions and plans to post the videos on their website in about 4 weeks.
- BIS announced five regulatory initiatives: (1) Expanding the Entity List; (2) Comprehensive Review of the Commerce Control List; (3) Revisions to the Encryption Regulations; (4) Revised De Minimis Regulations; and (5) a proposed rule will be published next week outlining the Intra-Company Transfer License Exception (ICT), for which a 45-day comment period will follow.
- BIS has expanded the foreign availability criteria beyond national security controls.
- Based on the representations by BIS, the Intra-Company Transfer License Exception (ICT) will require prior approval, which will be similar to the license application process; periodic reporting will be required; and only certain technology for deemed exports will be covered by the ICT license exception.
BIS Announces Five Regulatory Changes
10/02/08 10:14 PM
On
October 1, 2008, the Department of Commerce's
Bureau of Industry and Security (BIS) announced
five regulatory updates:
- Proposed rule to amend the Export Administration Regulations (EAR) to establish a new license exception entitled "Intra-Company Transfer (ICT)." (To be published in the Federal Register)
- Interim final rule to amend the EAR to make the treatment of encryption items more consistent with the treatment of other items subject to the EAR. (To be published in the Federal Register)
- Final rule to revise the EAR to implement changes agreed upon in the December 2007 Wassenaar Arrangement Plenary Meeting and the provisions regarding solar cells agreed upon in the December 2006 Plenary Meeting. (To be published in the Federal Register)
- Final rule to amend the EAR as a result of a systematic review of the Commerce Control List. (To be published in the Federal Register)
- Interim rule to amend the EAR to change the de minimis calculation for foreign produced hardware that is bundled with U.S.-origin software. (Published in today’s Federal Register)
BIS Publishes Update 2008 Plenary Remarks
09/30/08 08:55 PM
On
September 30, 2008, the Department of Commerce's
Bureau of Industry and Security (BIS) published the
Plenary Remarks of Assistant Secretary Christopher
R. Wall at the 2008 BIS Update Conference in
Washington, D.C. here.
BIS to Post Commodity Classificaton Information Based on Exporters' Request
09/26/08 08:17 AM
On
September 25, 2008, the U.S.
Department of Commerce’s Bureau of Industry and
Security (BIS) announced that it will
provide companies the opportunity to have their
Commodity Classification information
made accessible via the BIS
website.
If a company has, or plans to have, Commodity Classification information or an export control point of contact available on their website, and would like this information to be accessible via the BIS website, they are asked to contact CommodityClassification@bis.doc.gov. In the e-mail, the company must provide the following information, which then will be posted on the BIS website:
1) Company name, 2) General description of the products/services, 3) Commodity classification information website address, and 4) Export control point of contact.
If a company has, or plans to have, Commodity Classification information or an export control point of contact available on their website, and would like this information to be accessible via the BIS website, they are asked to contact CommodityClassification@bis.doc.gov. In the e-mail, the company must provide the following information, which then will be posted on the BIS website:
1) Company name, 2) General description of the products/services, 3) Commodity classification information website address, and 4) Export control point of contact.
BIS Issues Guidance on Illicit Diversion of Goods to Iran
09/25/08 06:34 AM
Following the
disbanding of an illicit Iranian global procurement
scheme, on September 24, 2008, the U.S. Department
of Commerce’s Bureau of Industry and security (BIS)
issued guidance on actions
exporters can take to prevent illegal diversion
of items to support Iran’s nuclear weapons or
ballistic missile programs.
Iran is currently trying to procure items for its uranium enrichment centrifuge program. Iran has admitted to evading international sanctions to procure sensitive items that can contribute to its weapons of mass destruction (WMD) programs. Specifically, Iranian entities form front companies in other countries for the sole purpose of exporting items to Iran that can be used in the nuclear and missile programs.
BIS recommends that the U.S. exporters take the following steps to prevent illicit export to Iran (more detail on the BIS Iranian Guidance website):
All exports to Iran are subject to the Export Administration Regulations (EAR) and the Department of the Treasury’s Iranian Transaction Regulations (ITR). Exports must be authorized by the Treasury’s Office of Foreign Assets Control (OFAC) prior to exporting to Iran. If ORAC authorizes such an export or reexport, no separate authorization from BIS is necessary.
Iran is currently trying to procure items for its uranium enrichment centrifuge program. Iran has admitted to evading international sanctions to procure sensitive items that can contribute to its weapons of mass destruction (WMD) programs. Specifically, Iranian entities form front companies in other countries for the sole purpose of exporting items to Iran that can be used in the nuclear and missile programs.
BIS recommends that the U.S. exporters take the following steps to prevent illicit export to Iran (more detail on the BIS Iranian Guidance website):
- Know your consumer;
- Understand “Red Flag” indicators;
- Be cautious of customers operating in transshipment countries or free trade zones;
- Screen parties to a transaction using the U.S. Government “Lists to Check” on BIS website;
- Contact BIS if something does not seem right about the transaction or if you suspect a shipment may have been diverted to Iran;
- Subscribe to the BIS listserv and to the Department of the Treasury, Office of Foreign Assets Control’s (OFAC) service to receive notifications about changes to the Entity List and List of Specially Designation Nationals and Blocked Persons.
All exports to Iran are subject to the Export Administration Regulations (EAR) and the Department of the Treasury’s Iranian Transaction Regulations (ITR). Exports must be authorized by the Treasury’s Office of Foreign Assets Control (OFAC) prior to exporting to Iran. If ORAC authorizes such an export or reexport, no separate authorization from BIS is necessary.
BIS Announces ETRAC Members
09/24/08 09:03 PM
On
September 23, 2008, the Department of Commerce's
Bureau of Industry and Security (BIS) announced the
membership of the Emerging Technology and Research
Advisory Committee (ETRAC) here.
ETRAC Members:
ETRAC Members:
| Pamela
Abshire, University of Maryland
|
Maja
Mataric, University of Southern California
|
| Jeffrey
Ashe, General Electric Global Research
|
Richard
McCullough, Carnegie Mellon University
|
| Robert
Breault, Breault Research Organization,
Inc.
|
Steven
Patterson, Lawrence Livermore National Lab.
|
| Claude
Canizares, Massachusetts Institute of
Technology
|
Carl A.
Picconatto, MITRE Experimental Laboratory
|
| A. Stephen
Dahms, Alfred E. Mann Foundation
|
Jeffrey
Puschell, Raytheon Space & Airborne
Systems
|
| Charbel
Farhat, Stanford University
|
Jeffrey
Reed, Virginia Tech
|
| Bob
Gleichauf, Cisco Systems
|
Michael
Reiter, University of North Carolina
|
| Harry
Kington, Honeywell Aerospace
|
Samuel
Stanley, Jr, Washington University
|
| Gerald
Kulcinski, University of Wisconsin
|
Marlin
Thomas, Air Force Institute of Technology
|
| Brooks
Keel, Louisiana State University
|
Thomas E.
Tierney IV, Los Alamos National Laboratory
|
| Nikolai
Leung, Qualcomm, Inc.
|
James
Tour, Rice University
|
| Seth R. Marder, Georgia Institute of Technology |
|
|
Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components Iranian Ring Charged with Procuring IED Components
09/18/08 08:23 AM
On
September 17, 2008, the Department of Justice
(DOJ) announced that a federal
grand jury in Miami, Florida, has returned a
Superseding Indictment charging
sixteen foreign nationals and corporations in
connection with their participation in
conspiracy to export U.S.-manufactured
commodities to prohibited entities and to Iran.
The Indictment includes charges of conspiracy, violations of the International Emergency Economic Powers Act (IEEPA) and the United States Iran Embargo, and making false statements to federal agencies in connection with the export of thousands of U.S. goods to Iran. Specifically, the Indictment alleges that the defendants purchased, and then caused the export of U.S. dual-use goods to ultimate buyers in Iran through middle countries, including the United Arab Emirates, Malaysia, England, Germany, and Singapore. Dual-use commodities are those that have commercial application, but could potentially be used to further the military or nuclear programs of other nations and thus could be detrimental to the foreign policy or national security of the United States.
The goods at issue are controlled by the Export Administration Regulations (EAR) for missile technology, national security and antiterrorism reasons as well as under the International Traffic in Arms Regulations (ITAR). In this case, the Indictment alleges that the defendants exported 120 field-programmable gate arrays, over 5,000 integrated circuits of varying types, around 345 Global Positioning Systems (GPS), 12,000 Microchip brand micro-controllers, and a Field Communication. These commodities have potential military applications, including as components in construction of improvised explosive devises (IEDs).
The charges announced are the result of a criminal investigation that was initiated in July 2006. Led by the Commerce Department, the investigation also included the efforts of the Departments of Homeland Security, Defense, State and Treasury.
As a result of investigation, the Commerce Department’s Bureau of Industry and Security (BIS) issued a Final Rule in the Federal Register announcing 75 additions to its Entity List because of their involvement in this illegal global procurement network for the benefit of the Iranian Government, and for their relationship to the Mayrow General Trading, one of the procurement front companies.
The Indictment includes charges of conspiracy, violations of the International Emergency Economic Powers Act (IEEPA) and the United States Iran Embargo, and making false statements to federal agencies in connection with the export of thousands of U.S. goods to Iran. Specifically, the Indictment alleges that the defendants purchased, and then caused the export of U.S. dual-use goods to ultimate buyers in Iran through middle countries, including the United Arab Emirates, Malaysia, England, Germany, and Singapore. Dual-use commodities are those that have commercial application, but could potentially be used to further the military or nuclear programs of other nations and thus could be detrimental to the foreign policy or national security of the United States.
The goods at issue are controlled by the Export Administration Regulations (EAR) for missile technology, national security and antiterrorism reasons as well as under the International Traffic in Arms Regulations (ITAR). In this case, the Indictment alleges that the defendants exported 120 field-programmable gate arrays, over 5,000 integrated circuits of varying types, around 345 Global Positioning Systems (GPS), 12,000 Microchip brand micro-controllers, and a Field Communication. These commodities have potential military applications, including as components in construction of improvised explosive devises (IEDs).
The charges announced are the result of a criminal investigation that was initiated in July 2006. Led by the Commerce Department, the investigation also included the efforts of the Departments of Homeland Security, Defense, State and Treasury.
As a result of investigation, the Commerce Department’s Bureau of Industry and Security (BIS) issued a Final Rule in the Federal Register announcing 75 additions to its Entity List because of their involvement in this illegal global procurement network for the benefit of the Iranian Government, and for their relationship to the Mayrow General Trading, one of the procurement front companies.
BIS Requests Comments on Foreign-Based Policy Export Controls
09/09/08 09:07 PM
On
September 8, 2008, the Department of Commerce's
Bureau of Industry and Security (BIS) published
a notice
in
the Federal Register requesting comments on
foreign-based policy export controls. BIS is
reviewing the foreign policy-based export
controls in the Export Administration
Regulations (EAR) to determine whether they
should be modified, rescinded, or extended. BIS
would like to receive comments on how existing
foreign policy-based export controls have
affected exporters and the general public.
In addition, BIS is particularly interested in comments regarding the Entity List (Supplement No. 4 to Part 744 of the EAR), including comments on its usefulness and format, as well as the specific entities listed and the licensing policies and requirements for each.
Comments must be received by October 8, 2008.
In addition, BIS is particularly interested in comments regarding the Entity List (Supplement No. 4 to Part 744 of the EAR), including comments on its usefulness and format, as well as the specific entities listed and the licensing policies and requirements for each.
Comments must be received by October 8, 2008.
BIS Issues Rule for Expanding Entity List
08/23/08 12:59 PM
On
August 21, 2008, Bureau of Industry and Security
(BIS) issued a final
rule that expands the
criteria for adding parties to the Entity List. The
BIS Entity List lists parties whose involvement in
a transaction can require a license under the
Export Administration Regulations (EAR). The list
specifies the license requirements that apply to
each listed entity.
Effective immediately, the new rule authorizes imposition of foreign policy export and reexport license requirements, limiting the availability of license exceptions, and setting license application review policy for exports and reexports. BIS may take such actions “if there is reasonable cause to believe, based on specific and articulable facts, that the entity has been involved, is involved, or poses a significant risk of becoming involved in activities that are contrary to the national security or foreign policy interests of the United States.”
Under the rule, the activities at issue do not have to be subject to EAR in order for a party to be placed on the Entity List. BIS lists five examples of conduct that could be found detrimental to the identified U.S. interests:
Supporting persons engaged in acts of terror;
Actions that could strengthen military or terrorism capabilities of governments that have been designated by the Secretary of State as repeatedly providing support for acts of international terrorism;
Dealing or assisting dealing in conventional weapons in a way contrary to the U.S. national security or foreign policy interest;
Preventing accomplishment of an end use check conducted by BIS or the Directorate of Defense Trade Controls; and
Engaging in conduct that poses a risk of violating the EAR when such conduct raises sufficient concern that prior review of exports or reexports enhances BIS’s ability to prevent EAR violations.
The rule applies to foreign parties only, and will not be used to add U.S. persons on the Entity List. Thus, a foreign party could be added to the Entity List if specific and articulable facts provide that it has been engaged in the type of conduct identified.
The new rule also amends the EAR to include a procedure for addressing requests of a listed parties to be removed from the list or have their listing modified.
Effective immediately, the new rule authorizes imposition of foreign policy export and reexport license requirements, limiting the availability of license exceptions, and setting license application review policy for exports and reexports. BIS may take such actions “if there is reasonable cause to believe, based on specific and articulable facts, that the entity has been involved, is involved, or poses a significant risk of becoming involved in activities that are contrary to the national security or foreign policy interests of the United States.”
Under the rule, the activities at issue do not have to be subject to EAR in order for a party to be placed on the Entity List. BIS lists five examples of conduct that could be found detrimental to the identified U.S. interests:
Supporting persons engaged in acts of terror;
Actions that could strengthen military or terrorism capabilities of governments that have been designated by the Secretary of State as repeatedly providing support for acts of international terrorism;
Dealing or assisting dealing in conventional weapons in a way contrary to the U.S. national security or foreign policy interest;
Preventing accomplishment of an end use check conducted by BIS or the Directorate of Defense Trade Controls; and
Engaging in conduct that poses a risk of violating the EAR when such conduct raises sufficient concern that prior review of exports or reexports enhances BIS’s ability to prevent EAR violations.
The rule applies to foreign parties only, and will not be used to add U.S. persons on the Entity List. Thus, a foreign party could be added to the Entity List if specific and articulable facts provide that it has been engaged in the type of conduct identified.
The new rule also amends the EAR to include a procedure for addressing requests of a listed parties to be removed from the list or have their listing modified.
BIS Agenda for Next Six Months Outlined
08/07/08 10:18 PM
On
July 30, 2008, Under Secretary of Commerce Mario
Mancuso delivered a keynote address to the
Washington International Trade Association
entitled, "Sprinting to the Finish - The BIS
Agenda for the Final Six
Months."
Highlights of the agenda are:
Highlights of the agenda are:
- BIS will continue to focus on the areas of highest enforcement concern to the agency: nations of illicit trans-shipment concern, proliferators, and terrorists - with Iran being of particular concern. Reauthorization of the EAA is a priority for the agency.
- BIS will work to implement the dual-use directive signed by the President this past January and BIS hopes to make meaningful progress on the following regulatory issues: the intra-company transfer license exception, deemed exports, encryption, thermal imaging, foreign availability, and 17C.
- BIS will continue to support its current work and make a smooth transition to the new administration. BIS is committed to doing its best to attract the best and brightest to public service, better integrate its enforcement and policy functions, improving interagency engagement, upgrading its technology infrastructure and business processes over time, and better aligning its workforce to address BIS's highest priorities.
BIS Announces Dates for Update 2008 Conference
07/24/08 05:24 PM
On
July 24, 2008, the Bureau of Industry and Security
(BIS) announced the dates for its Update 2008
conference. Update 2008 will be held from September
29, 2008 - October 1, 2008. Further information can
be found here and the agenda
can be found here.
BIS states:
BIS had posted information on how to express your interest in attending Update 2008 and will e-mail instructions on how to register on July 25, 2008. BIS states, "Since there was more interest than space available at the conference, those whose names are not drawn will be placed on a waiting list and notified of how to register as space becomes available." For those who receive the registration email, they must register by August 18th, or their spot will be given to those on the wait list.
BIS states:
Update activities will begin on Monday, September 29 featuring mini training sessions for those new to Update as well as an Exhibit Hall with industry and government exhibitors. The main conference will begin on Tuesday, September 30 and end on Wednesday, October 1. Please see the Agenda for conference details. A Program Description will be posted in the coming weeks.
BIS had posted information on how to express your interest in attending Update 2008 and will e-mail instructions on how to register on July 25, 2008. BIS states, "Since there was more interest than space available at the conference, those whose names are not drawn will be placed on a waiting list and notified of how to register as space becomes available." For those who receive the registration email, they must register by August 18th, or their spot will be given to those on the wait list.
BIS Posts Q & As on Recent North Korea Presidential Announcement
07/09/08 02:36 PM
On
July 8, 2008, the Bureau of Industry and Security
(BIS) posted questions and answers on the recent
Presidential announcement with regard to the
rescission of North Korea from the State Sponsor of
Terrorism (SST) List (here). The
questions and answers provide exporters with
guidance as to what practical changes they can
expect as a result a result of the Executive
Order (which can be found here).
In essence, the Q&A states that the President's June 26, 2008 announcement triggered a 45-day congressional notification period prior to the formal rescission of the SST designation. The Administration will carry out the formal rescission only after the Six Parties (along with North Korea - China, Russia, Japan, South Korea, and the United States) reach agreement on acceptable verification and monitoring principles and protocols regarding North Korea's nuclear activities. Following such agreement, and barring further congressional action, BIS plans to publish an amendment to the Export Administration Regulations (EAR) removing North Korea from Country Group E:1 and making other conforming changes to implement the rescission. Removing North Korea from Country Group E:1 will raise the threshold value for calculating the de minimis level of foreign goods destined to North Korea to 25% controlled U.S. content. Currently, as a member of Country Group E:1, the threshold value is 10%.
However, the President's announcement does not signal a change for U.S. exporters currently. BIS states that pursuant to Section 746.4 of the EAR, it will continue to require a license for the export or reexport to North Korea of items subject to the EAR, except food and medicine classified as EAR99. BIS also stated that even after North Korea's SST designation is rescinded, certain export control requirements, in particular those related to North Korea's detonation of a nuclear device on October 9, 2006, proliferation activities, and human rights violations, will continue to apply on the basis of other laws and regulations, and in accordance with United Nations Security Council Resolution 1718.
BIS also stated that its licensing policy for North Korea has not yet changed. Once the rescission takes effect, it will review applicable licensing policy. Currently, the licensing policy for North Korea is as follows:
In essence, the Q&A states that the President's June 26, 2008 announcement triggered a 45-day congressional notification period prior to the formal rescission of the SST designation. The Administration will carry out the formal rescission only after the Six Parties (along with North Korea - China, Russia, Japan, South Korea, and the United States) reach agreement on acceptable verification and monitoring principles and protocols regarding North Korea's nuclear activities. Following such agreement, and barring further congressional action, BIS plans to publish an amendment to the Export Administration Regulations (EAR) removing North Korea from Country Group E:1 and making other conforming changes to implement the rescission. Removing North Korea from Country Group E:1 will raise the threshold value for calculating the de minimis level of foreign goods destined to North Korea to 25% controlled U.S. content. Currently, as a member of Country Group E:1, the threshold value is 10%.
However, the President's announcement does not signal a change for U.S. exporters currently. BIS states that pursuant to Section 746.4 of the EAR, it will continue to require a license for the export or reexport to North Korea of items subject to the EAR, except food and medicine classified as EAR99. BIS also stated that even after North Korea's SST designation is rescinded, certain export control requirements, in particular those related to North Korea's detonation of a nuclear device on October 9, 2006, proliferation activities, and human rights violations, will continue to apply on the basis of other laws and regulations, and in accordance with United Nations Security Council Resolution 1718.
BIS also stated that its licensing policy for North Korea has not yet changed. Once the rescission takes effect, it will review applicable licensing policy. Currently, the licensing policy for North Korea is as follows:
- The U.S. Government will generally approve applications to export or reexport: (a) Non-food, non-medical humanitarian items meeting subsistence needs and intended for the benefit of the North Korean people; and (b) Items in support of the United Nations and other humanitarian efforts.
- The U.S. Government will generally deny applications to export or reexport to North Korea: (a) Luxury goods (an illustrative list of luxury goods appears on the BIS website); (b) Arms and related materiel, and items controlled under the multilateral export control regimes; and (c) Items that could contribute to North Korea's nuclear-, ballistic missile-, or other weapons of mass destruction-related programs.
- The U.S. Government will review, on a case-by-case basis, applications to export and reexport all other items subject to the EAR, consistent with all applicable licensing policies set forth in the EAR
BIS Announces Antiboycott Online Training
06/18/08 10:07 AM
On
June 17, 2008, the Bureau of Industry and Security
(BIS) announced
the
availability of a new training presentation on
antiboycott compliance on its BIS Online
Training Room.
BIS Forms Emerging Technology and Research Advisory Committee (ETRAC)
05/24/08 09:28 PM
On May
23, 2008, the Bureau of Industry and Security
(BIS) announced the
establishment of the Emerging Technology and
Research Advisory Committee (ETRAC). The ETRAC
will assist BIS in evaluating currently
controlled technologies and emerging
technologies which may have national security
significance.
BIS stated:
The ETRAC was formed in response to the dual-use export control directive issued by the President on January 22, 2008 to the Secretary of Commerce to implement programs to assess whether regulations "control the export and reexport of sensitive items while minimizing the impact on U.S. competitiveness and innovation." The ETRAC was also established in response to a recommendation of the Deemed Export Advisory Committee (DEAC).
BIS encourages qualified leaders in industry, academia, and research who have an in-depth knowledge of U.S. research and emerging technology that could affect U.S. national security to apply for ETRAC membership (information can be found in this Federal Register notice).
BIS stated:
The ETRAC will provide recommendations to BIS on how to help keep the Commerce Control List current with respect to emerging technologies and research and development activities that have dual-use applications. The committee will assess new and existing regulatory controls that are of greatest consequence to U.S. national security and study the implications of the release of dual-use technology to foreign nationals under current deemed exports licensing requirements.
The ETRAC was formed in response to the dual-use export control directive issued by the President on January 22, 2008 to the Secretary of Commerce to implement programs to assess whether regulations "control the export and reexport of sensitive items while minimizing the impact on U.S. competitiveness and innovation." The ETRAC was also established in response to a recommendation of the Deemed Export Advisory Committee (DEAC).
BIS encourages qualified leaders in industry, academia, and research who have an in-depth knowledge of U.S. research and emerging technology that could affect U.S. national security to apply for ETRAC membership (information can be found in this Federal Register notice).
BIS Seeks Comments on Deemed Export Advisory Committee Recommendations
05/20/08 10:28 PM
On May
19, 2008, the Bureau of Industry and Security
(BIS) published a
notice in the Federal Register seeking public
comments on the Deemed Export Advisory Committee
(DEAC) Recommendations. Specifically, BIS is
seeking comments on whether the scope of
technologies on the Commerce Control List that
are subject to deemed export licensing
requirements should be narrowed, and if so,
which technologies should be subject to deemed
export licensing requirements. In addition, BIS
is seeking comments on whether a more
comprehensive set of criteria should be used to
assess country affiliation for foreign nationals
with respect to deemed exports.
Comments must be received no later than August 18, 2008. The DEAC report may be accessed here.
Comments must be received no later than August 18, 2008. The DEAC report may be accessed here.
BIS Deemed Export Webinar - April 15
04/03/08 12:14 PM
BIS
announced a Deemed Export Webinar which will take
place on April 15, 2008 from 1pm - 2pm Eastern. The
webinar costs $35 and one can sign up
here. BIS states
that participants will learn about the recently
issued Deemed Export Advisory
Committee's (DEAC) report and will learn
about deemed exports rules and regulations. Alex
Lopes, Director of the Deemed Exports and
Electronics Division of BIS, will be the main
speaker and will respond to questions. All that
is needed to participate is a telephone for the
audio portion and a computer with high speed
internet access for the visual portion of the
webinar.
Highlights from BIS's 2008 Export Control Forum in Newport Beach
03/24/08 09:37 PM
The
Bureau of Industry and Security (BIS) held its 3rd
Annual Export Control Forum in Newport Beach, CA on
March 17, 2008. BIS, Census and Office of Foreign
Assets Control (OFAC) provided updates to the
trade. Global Trade Expertise attended and in case
you missed it, we'll recap the highlights here.
- In a presentation by Gerry Horner, Senior Trade and Industry Analyst, Office of Technology Evaluation, Mr. Horner stated that BIS has been measuring EAR compliance by comparing data elements in AES and license approvals. For example, BIS is comparing approved licenses to licensed exports, comparing license values to licensed export values, and comparing countries on license with licensed exports. BIS is also scrutinizing license exception uses and EAR99 classifications.
- Alex Lopes, Director of BIS' Deemed Exports and Electronics Division, gave a presentation and a half-day seminar on Deemed Exports. Mr. Lopes set forth two general findings of the Deemed Export Advisory Committee (DEAC) Report as: (1) strengthening and streamlining deemed export policy and process; and (2) expanding BIS' outreach. With regard to the second recommendation, BIS will be updating its website, providing more frequent webinars, and tailoring outreach. In fact, BIS will be having a webinar on Deemed Exports on April 15, 2008.
- With regard to implementing the first recommendation: strengthening and streamlining deemed export policy and process, Mr. Lopes set fort the following steps:
- BIS announced in February the establishment of the Emerging Technologies and Research Advisory Committee (ETRAC), which will work on creating a list of technologies that should be regulated for deemed export purposes;
- BIS is creating a license exception for intra-company transfers (ICT) of both commodities and technology that is currently being reviewed by other government agencies;
- BIS is seeking to establish objective licensing criteria when reviewing dual nationals;
- BIS is in the process of redesigning its website to simply and clarify regulatory language and online guidance; and
- BIS is undertaking a comprehensive review of the CCL.
- Darryl Jackson, Assistant Secretary of Commerce for Export Enforcement, stated that the fourth export enforcement priority is now Antiboycott Compliance (after Weapons of Mass Destruction Proliferation, Terrorism and State Sponsorship of Terror, and Diversions to Unauthorized Military End-Use).
- Mr. Jackson also revealed for the first time the 9 Factors to an Effective Compliance Program that would be entitled to great weight mitigation, which will be posted on the BIS website: (1) whether a company has performed a meaningful risk analysis; (2) the existence of formal written compliance program; (3) whether appropriate senior company officials are responsible for overseeing the export compliance program; (4) whether adequate training is provided to employees; (5) whether the company adequately screens its customers and transactions; (6) whether company meets recordkeeping requirements; (7) the existence and operation of an internal system for reporting export violations; (8) the existence and results of internal or external reviews or audits (with associated updates of the EMCP); and (9) whether remedial activity has been taken in response to export violations.
- Todd Willis, Assistant Director, Office of Enforcement Analysis gave an update on BIS' end-use checks. In 2008, BIS will begin conducting end-use checks (EUC) on software and technology. Mr. Willis provided information that BIS will look for during end use checks, which elicited questions from the audience regarding how much control BIS expects exporters to exert over foreign customers and what the effects of an unfavorable EUC will have on future license applications.
BIS Establishes Online Export Control Training Room
03/19/08 10:40 PM
On
March 19, 2008, the Department of Commerce's Bureau
of Industry and Security (BIS) announced the creation of
an BIS Online
Training Room. In its
announcement, BIS stated:
The Online Training Room currently provides 3 training modules:
1. Export Control Basics
2. Classifying Your Item and Determining If You Need a License
3. General Prohibitions including Prohibited End-Users and End-Uses & Activities
Also included in the Online Training Room are BIS' previously conducted webinars:
1. Reexport Controls (March 12, 2008)
2. An Introduction to Commercial Export Licensing Requirements (Spanish) (October 18, 2007)
3. Intermediate Deemed Exports (August 29, 2007)
4. Update to China Export Control Policy (June 20, 2007)
5. An Introduct to Commercial Export Licensing Requirements (May 15, 2007)
BIS states, "We wll continue to create and update content for the online training room, and would welcome your suggestions for how to further improve our outreach efforts."
As part of its ongoing efforts to improve outreach, BIS will continue to create and supplement the materials regularly. The initial launch includes the first half of the Essentials of Export Controls seminar that BIS currently offers around the country, as well as five pre-recorded webinars covering a variety of topics. The training modules are presented in a video streaming format. The pre-recorded BIS webinars were conducted over the past year and focus on specific export control issues.
The Online Training Room currently provides 3 training modules:
1. Export Control Basics
2. Classifying Your Item and Determining If You Need a License
3. General Prohibitions including Prohibited End-Users and End-Uses & Activities
Also included in the Online Training Room are BIS' previously conducted webinars:
1. Reexport Controls (March 12, 2008)
2. An Introduction to Commercial Export Licensing Requirements (Spanish) (October 18, 2007)
3. Intermediate Deemed Exports (August 29, 2007)
4. Update to China Export Control Policy (June 20, 2007)
5. An Introduct to Commercial Export Licensing Requirements (May 15, 2007)
BIS states, "We wll continue to create and update content for the online training room, and would welcome your suggestions for how to further improve our outreach efforts."
BIS Announces Steps to Implement Deemed Export Advisory Committee Recommendations
02/07/08 02:44 PM
On
February 6, 2008, the Department of Commerce's
Bureau of Industry and Security (BIS)
announced
that it had
completed its review of the Deemed Export
Advisory Committee's (DEAC) report. BIS states
that the Department has begun to work with its
U.S. government partners, including the
Departments of Defense, State, and Energy, to
"consider the report's analysis and
recommendations as a basis for reforming current
deemed export policy."
A "deemed export" is the transfer of controlled dual-use technology to a foreign national while in the United States. BIS stated that, "Given the significant role that foreign nationals play in the U.S. research system, deemed export policy has significant implications for U.S. national security and economic competitiveness."
Mario Mancuso, Under Secretary of Commerce for Industry and Security, stated, "U.S. deemed export policy must account for the variety of risks we face. While our rules should not permit the transfer of sensitive U.S. technology to a real or potential adversary, they must ensure the United States remains the most innovative and competitive economy in the world."
While certain proposals under active consideration will require interagency support, Under Secretary Mancuso has directed BIS to immediately:
A "deemed export" is the transfer of controlled dual-use technology to a foreign national while in the United States. BIS stated that, "Given the significant role that foreign nationals play in the U.S. research system, deemed export policy has significant implications for U.S. national security and economic competitiveness."
Mario Mancuso, Under Secretary of Commerce for Industry and Security, stated, "U.S. deemed export policy must account for the variety of risks we face. While our rules should not permit the transfer of sensitive U.S. technology to a real or potential adversary, they must ensure the United States remains the most innovative and competitive economy in the world."
While certain proposals under active consideration will require interagency support, Under Secretary Mancuso has directed BIS to immediately:
- Create an Emerging Technologies Advisory Committee, composed of representatives from leading research universities, government research labs, and industry to make recommendations to BIS regarding emerging technologies on a regular basis; and
- Improve outreach and engagement efforts to the academic and technology communities about the progress and scope of the deemed export policy efforts.
BIS' SNAP-R Webinar Now Available
12/19/07 05:08 PM
BIS Expands License Exceptions TMP & BAG
12/12/07 09:53 PM
The new rule expands the availability of TMP and BAG to allow for certain temporary exports and reexports of technology by U.S persons to U.S. persons or their employees traveling or temporarily assigned abroad. However, there are several significant limitations to the license exceptions for technology:
- The license exceptions are only available to U.S. persons or non-U.S. persons otherwise authorized to receive the technology (e.g., under a license or license exception) or, alternatively do not require such authorization due to the technology's NLR status. In addition, the employer must demonstrate and document for recordkeeping purposes the reason that the technology authorized under the tools of trade provisions is needed by the non-U.S. employees.
- The technology exported under these license exceptions may not be thereafter be disclosed to anyone who is also not a U.S. person or otherwise authorized to receive the data.
- If the technology authorized under License Exception TMP is shipped or transmitted in a format that could facilitate a subsequent release of the technology must be returned to the U.S. or disposed of within 12 months from the export pursuant to the License Exception.
- The new rule also requires that the exporting or reexporting party and the recipient take adequate security protections to protect against unauthorized access to the technology while the technology is being transmitted and used overseas, such as secure connections (such as VPN) and the use of password systems and/or personal firewalls on electronic devices.
- The technology authorized under these provisions may not be used for foreign production purposes or for technical assistance unless authorized by BIS.
- Encryption technology under ECCN 5E002 is not authorized for export or reexport under the amended "tools of trade" provisions of License Exception TMP or under BAG § 740.14 to any destination listed in Country Group E:1 of Supplement No. 1 to part 740. for export or reexport of 5E002 technology by companies, their subsidiaries and employees, BIS states that License Exception Encryption Commodities and Software (ENC) in § 740.17 should be used.