BIS Adds AMD China, Inc. as an Authorized Validated End-User
05/14/10 12:01 PM
On May
10, 2010, the Bureau of Industry and Security
(BIS) amended the Export
Administration Regulations (EAR) to add Advanced
Micro Devices China, Inc., as an end-user to the
list of validated end-users in the People's
Republic of China. Exports, reexports and
transfers of certain items to this end-user are
now authorized under Authorization Validated
End-User (VEU).
BIS further revised the EAR with additional AMD China information on May 14, 2010.
BIS further revised the EAR with additional AMD China information on May 14, 2010.
President Obama Advances Reform of the U.S. Export Controls
01/01/10 04:27 PM
Space
News reported that in a
presidential directive signed on December 21,
2009, President Barack Obama has directed his
administration to provide a comprehensive set of
recommendations to create a new U.S. export
control regime.
The recommendations, which are due on January 29, 2010, must be based on the findings of interagency review of U.S. regulations that govern exports of unclassified military and dual use technologies and that was announced by the White House on August 13, 2009. In his directive, the President requires that the recommendations include statutory and regulatory steps necessary for implementation.
The review is being conducted by a joint task force established by National Security Adviser and National Economic Council Director, and includes staff members of the National Security Council. The establishment of the review on August 13, 2009, was the first official indication that Obama would develop export control reform.
Some U.S. industries may benefit from a complete transformation of the current export controls system. The U.S. space industry’s market share declined since increased restrictions on U.S. commercial communications satellite exports in 1999, when Congress made all commercial satellites subject to International Traffic in Arms Regulations (ITAR) following allegations that China’s military was benefiting from launches of U.S. spacecraft. Prior to this legislation, the Commerce Department had export licensing authority over all commercial communications satellites, with the exception of the most sophisticated ones.
Defense News reported that 19 industry lobbying groups, representing hundreds of U.S. companies from warplane manufacturers to software encoders, have relaunched a campaign for export controls reform.
Specifically, the groups seek to de-emphasize current reliance on munitions and dual use technology lists, and instead want to base export decisions on factors such as whether an item can be bought from a foreign country, whether it is widely used outside of defense industry and whether the buyer is a trusted partner.
A key factor in the reform would be consideration of “foreign availability” in deciding whether an item can be exported. According to the lobbyists, if weapons technology can be bought from other countries, there may be little gain in terms of security by restricting U.S. export of those items or technology.
Furthermore, the groups seek that export rules be more specific: e.g., unarmed unmanned aerial vehicles (UAVs) and blimps should not be controlled in the same way that missiles are. Similarly, commercial satellites should not be treated as munitions.
The lobbyists argue that the U.S. Munitions List should be edited to remove items no longer controlled, and a more concrete process should be established for qualifying goods as defense items. One of the lobbying groups seeks that the Commerce Department’s dual-use technology list would be completely erased, after which the Commerce Department would provide reasons for why any one item should be placed on the list.
The groups also recommend that export controls should be switched from a transaction-based approach to a trusted partner process. Accordingly, licenses would not be required for each sale if items were sold to companies and countries that are designated trusted partners.
Current push for reform is likened to a group effort in 2007 to convince Bush administration to reform U.S. export control regime. As a result of the 2007 process, licensing procedures were improved and waiting periods for export licenses were greatly decreased.
The recommendations, which are due on January 29, 2010, must be based on the findings of interagency review of U.S. regulations that govern exports of unclassified military and dual use technologies and that was announced by the White House on August 13, 2009. In his directive, the President requires that the recommendations include statutory and regulatory steps necessary for implementation.
The review is being conducted by a joint task force established by National Security Adviser and National Economic Council Director, and includes staff members of the National Security Council. The establishment of the review on August 13, 2009, was the first official indication that Obama would develop export control reform.
Some U.S. industries may benefit from a complete transformation of the current export controls system. The U.S. space industry’s market share declined since increased restrictions on U.S. commercial communications satellite exports in 1999, when Congress made all commercial satellites subject to International Traffic in Arms Regulations (ITAR) following allegations that China’s military was benefiting from launches of U.S. spacecraft. Prior to this legislation, the Commerce Department had export licensing authority over all commercial communications satellites, with the exception of the most sophisticated ones.
Defense News reported that 19 industry lobbying groups, representing hundreds of U.S. companies from warplane manufacturers to software encoders, have relaunched a campaign for export controls reform.
Specifically, the groups seek to de-emphasize current reliance on munitions and dual use technology lists, and instead want to base export decisions on factors such as whether an item can be bought from a foreign country, whether it is widely used outside of defense industry and whether the buyer is a trusted partner.
A key factor in the reform would be consideration of “foreign availability” in deciding whether an item can be exported. According to the lobbyists, if weapons technology can be bought from other countries, there may be little gain in terms of security by restricting U.S. export of those items or technology.
Furthermore, the groups seek that export rules be more specific: e.g., unarmed unmanned aerial vehicles (UAVs) and blimps should not be controlled in the same way that missiles are. Similarly, commercial satellites should not be treated as munitions.
The lobbyists argue that the U.S. Munitions List should be edited to remove items no longer controlled, and a more concrete process should be established for qualifying goods as defense items. One of the lobbying groups seeks that the Commerce Department’s dual-use technology list would be completely erased, after which the Commerce Department would provide reasons for why any one item should be placed on the list.
The groups also recommend that export controls should be switched from a transaction-based approach to a trusted partner process. Accordingly, licenses would not be required for each sale if items were sold to companies and countries that are designated trusted partners.
Current push for reform is likened to a group effort in 2007 to convince Bush administration to reform U.S. export control regime. As a result of the 2007 process, licensing procedures were improved and waiting periods for export licenses were greatly decreased.
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.
Free Downloads of Mass Market Software by Anonymous Persons Do Not Violate EAR
09/12/09 04:12 PM
The
U.S. Department of Commerce’s Bureau of Industry
and Security (BIS) released an advisory
opinion, dated
September 11, 2009, on whether a company would
be in violation of the Export Administration
Regulations (EAR) if it allowed encrypted
software, classified by BIS as “mass market,” to
be downloaded free of charge from the company’s
website without restriction.
In the advisory opinion, BIS stated:
On the issue of whether the same would apply if the user was required by the company to provide a name and email address before download occurs, BIS stated that in such a case the download of the software would not be considered anonymous; thus, allowing the download by a person in a country embargoed under the EAR (15 C.F.R. Part 746) without the necessary licenses would constitute a violation of the EAR.
However, in circumstances where the IP address of the user downloading the software is collected by the software provider at the time of the download and is stored as a “footprint” in the machine code of the software provider’s data base but is not tracked or used for any purpose by the software provider, then a violation would not occur.
The advisory opinion was limited to the interpretation of the EAR; the sanctions regulations implemented by the Office of Foreign Assets Control of the U.S. Department of Treasury (OFAC) were not addressed.
In the advisory opinion, BIS stated:
Publishing “mass market” encryption software to the Internet where it may be downloaded by anyone neither establishes “knowledge” of a prohibited export or reexport nor triggers any “red flags” necessitating the affirmative duty to inquire under the “Know Your Customer” guidance provided in the EAR. Therefore a person or company would not be in violation of the EAR if it posts “mass market” encryption software on the Internet for free and anonymous download and then at a later time the software is downloaded by an anonymous person in Iran, Cuba, Syria, Sudan or North Korea.
On the issue of whether the same would apply if the user was required by the company to provide a name and email address before download occurs, BIS stated that in such a case the download of the software would not be considered anonymous; thus, allowing the download by a person in a country embargoed under the EAR (15 C.F.R. Part 746) without the necessary licenses would constitute a violation of the EAR.
However, in circumstances where the IP address of the user downloading the software is collected by the software provider at the time of the download and is stored as a “footprint” in the machine code of the software provider’s data base but is not tracked or used for any purpose by the software provider, then a violation would not occur.
The advisory opinion was limited to the interpretation of the EAR; the sanctions regulations implemented by the Office of Foreign Assets Control of the U.S. Department of Treasury (OFAC) were not addressed.
Exporter Agrees to $610,000 Penalty for EAR Violations
08/13/09 08:12 AM
On
August 13, 2009, the Commerce Department’s Bureau
of Industry and Security (BIS) announced that FMC
Technologies, Inc. has agreed to pay a $610,000
civil penalty to settle allegations that between
2003 and 2007 it exported oil and gas industry
service parts in violation of the Export
Administration Regulations (EAR).
The allegations against the Houston, Texas provider of specialty oil and gas products and services involved 78 unlicensed exports of butterfly and check valves classified under the ECCN 2B350 and controlled for reasons of chemical and biological weapons proliferation.
The company voluntarily disclosed the violations and cooperated with the investigation.
The allegations against the Houston, Texas provider of specialty oil and gas products and services involved 78 unlicensed exports of butterfly and check valves classified under the ECCN 2B350 and controlled for reasons of chemical and biological weapons proliferation.
The company voluntarily disclosed the violations and cooperated with the investigation.
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.
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 Requests Comments on EAR Crime Control License Requirements
03/19/08 10:29 PM
On March 19, 2008, the
Department of Commerce's Bureau of Industry and
Security (BIS) published a notice of inquiry in
the Federal
Register requesting public comments on the
crime control export and reexport license
requirements in the Export Administration
Regulations (EAR). BIS is seeking comments on
whether the scope of items currently subject to
crime control license requirements should be
revised to add or remove items and is also seeking
comments on whether the destinations to which crime
control license requirements apply should be
revised.
The Notice of Inquiry can be found here. Comments must be received no later than June 17, 2008.
The Notice of Inquiry can be found here. Comments must be received no later than June 17, 2008.
Political Backstory Behind Recent Presidential Export Control Directives
01/31/08 09:35 AM
On January 31, 2008,
Politico.com reported on the political lobbying
that took place prior to President Bush's issuance
of directives meant to modernize the State
Department and Commerce Department's export control
activities. The report entitled, "High-Tech Lobby
Notches Victory," can be read here.
President Bush Issues Export Control Directives
01/23/08 12:54 AM
On January 22, 2008,
President Bush announced presidential directives
aimed at modernizing export controls under both the
ITAR and the EAR. In a brief statement, the White
House said the package of directives would promote
a "more efficient and transparent export licensing
process."
With regard to the State Department, President Bush directed:
More Effective U.S. Export Licensing
A More Efficient Dispute Resolution Mechanism
Enhanced Enforcement
With regard to the Commerce Department, the Presidential directive recommended:
• Maintaining a Validated End User program to ease exports to “reliable foreign companies,” while imposing additional scrutiny on exports to less favored foreign buyers.
• Conducting regular updates of the export controls on dual-use items.
• Revising rules on intra-company transfers of sensitive items.
• Revising rules restricting the export of encryption products.
• Reviewing re-export controls.
• Increasing transparency by publishing advisory opinions on the Internet and listing foreign parties that warrant higher scrutiny.
With regard to the State Department, President Bush directed:
More Effective U.S. Export Licensing
- Additional financial resources and intelligence support will be made available for the timely adjudication of defense trade licenses.
- Guidelines will be issued that require a decision by the U.S. Government on defense trade export license applications within 60 days, absent a strong reason for additional time, such as a requirement for Congressional notification. Initial efforts in this regard have resulted in a nearly 50 percent reduction since April 2007 in the number of export license applications pending with the Department of State.
- The electronic licensing system will be upgraded to permit the submission of all types of defense trade licenses and to enable all agencies to access the same electronic information.
- The Secretary of State will update U.S. controls on exports involving dual and third country nationals from NATO and other allied countries.
A More Efficient Dispute Resolution Mechanism
- A formal interagency dispute mechanism will be created to allow for timely resolution of licensing jurisdiction issues involving the Departments of State and Commerce under the Commodity Jurisdiction (CJ) process. The National Security Council will also undertake a review to make sure the CJ process is efficient and timely.
Enhanced Enforcement
- A multi-agency working group will be established to improve procedures for conducting export enforcement investigations.
With regard to the Commerce Department, the Presidential directive recommended:
• Maintaining a Validated End User program to ease exports to “reliable foreign companies,” while imposing additional scrutiny on exports to less favored foreign buyers.
• Conducting regular updates of the export controls on dual-use items.
• Revising rules on intra-company transfers of sensitive items.
• Revising rules restricting the export of encryption products.
• Reviewing re-export controls.
• Increasing transparency by publishing advisory opinions on the Internet and listing foreign parties that warrant higher scrutiny.