License Exceptions

BIS Expands License Exceptions TMP & BAG

12/12/07 09:53 PM Posted by Jennifer Kessinger

On December 12, 2007, the Bureau of Industry and Security (BIS) published a final rule to amend the Export Administration Regulations (EAR) to expand the availability of the License Exceptions for Temporary Imports, Exports, and Reexports (TMP) and Baggage (BAG) to allow for certain temporary exports and reexports of technology. Part 740 of the EAR provides for the License Exceptions TMP (§ 740.9) and BAG (§ 740.14) both contain tools of trade provisions (§ 740.9(a)(2)(i) and § 740.14(b)(4), respectively), which authorize certain temporary exports and reexports for usual and reasonable kinds and quantities of tools of trade. Prior to the new rule, TMP and BAG did not authorize temporary exports or reexports of technology.

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.

Tags: Rulemaking, EAR