Bureau of Industry and Security Department of Commerce

Complying with

U.S. Export Controls

Bureau of Industry and Security Department of Commerce

John BushnellJuly 25, 2013QUE Group 2013 Conference, San Diego, CA

Our Contact InformationBureau of Industry and Security

Western Regional Office

2302 Martin Street, Suite 330

Irvine, California 92612

T: 1-949-660-0144

F: 1-949-660-9347

Northern California Branch

160 West Santa Clara Street, Suite 725

San Jose, California 95113

T: 1-408-998-8806

F: 1-408-998-8677

www.bis.doc.gov

BIS Mission Statement

To advance U.S. national security,foreign policy, and economic objectivesby ensuring an effective export control

and treaty compliance system and promoting continued U.S. strategic

technology leadership

Overview

Transactions we control

BIS regulates “exports” and“reexports” of “items” “subject to theEAR” in addition to certain activities of

U.S. persons.

Authority to Administer Controls

Export Administration Act (EAA)

International Emergency Economic Powers Act (IEEPA)

Export Administration Regulations (EAR)

EAR

BIS

Reasons Why We Control Exports

National Security Foreign Policy

• Crime control• Anti-terrorism• Regional Stability

Non Proliferation• Nuclear weapons• Chemical/biological weapons• Missiles

Multilateral Export Control Regimes Wassenaar Arrangement

• Supplement 1 to Part 743• www.wassenaar.org/

Missile Technology Control Regime (MTCR)• Supplement 1 to Part 740 (A:2)• www.mtcr.info/

Nuclear Suppliers Group (NSG)• Supplement 1 to Part 740 (A:4)• www.nuclearsuppliersgroup.org/

Australia Group (AG)• Supplement 1 to Part 740 (A:3)• www.australiagroup.net

Export Administration Regulations Designed to implement the Export

Administration Act

Apply to commercial and some military items• Items that can be used in both commercial

and military/strategic applications• Also apply to items that have solely civil uses• Other agencies have jurisdiction over some

exports

How do I determine my regulatory requirements?

Depends upon:1. What is the product?2. Where is the product going?3. Who is the end user?4. What is the end use?

End use concerns Nuclear

• Section 744.2 Chemical/Biological Weapons

• Section 744.3 Missile

• Section 744.4 Support of these activities by a U.S.

Person• Section 744.6

What is an Item?(Section 734.2)

Commodity Software Technical Data

What is an export? A shipment out of the United States An electronic transmission out of the

United States Release of technology to a foreign

national in the United States• Technology – specific information

necessary for the “development”, “production”, or “use” of a product

Definitions and Terms

What is a Reexport? A shipment of a U.S. origin item from one

foreign country to another

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

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

Who is the Exporter?(Part 772)

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

IMPORTANT CONCEPT:

Having an Export Control Classification Number (ECCN) does NOT

automatically mean that a license is required to all destinations

Being classified as EAR99 does NOT automatically mean that a license is

NOT required to a particular destination

Are You Subject to the EAR?(Continued)

U.S. Persons & Foreign Nationals

Certain activities of U.S. persons (Part 744)

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

Deemed Exports (Section 734.2(b)(2)(ii))

The release of technology or source code subject to the EAR to a foreign

national in the United States is “deemed” to be an export to the

home country of the foreign national.

Deemed Exports (Section 734.2(b)(2)(ii))

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

Tours of laboratories Foreign national employees involved in certain research, development, and manufacturing activities Foreign students or scholars conducting research Hosting of foreign scientist

Deemed Exports (Section 734.2(b)(2)(ii))

Export Enforcement Note

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

Because the violation typically occurs in the U.S. and all parties are typically in the U.S., this is very

often the easiest to prove in a court of law.

Exempted from the Rule(Section 734.2(b)(2)(ii))

Any foreign national is subject to the deemed export rule except:• A person granted U.S. citizenship;• A person granted permanent

residence status (i.e., “Green Card” holders);

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

What Kind of Authorization is Required to Export?

NO LICENSE REQUIRED (NLR)

LICENSE EXCEPTION

LICENSE or

VEU

ON LINE ACCESSBIS home page

www.bis.doc.gov

E-mail notifications (Seminars, Regulatory changes, etc.)

SNAP-R (Online Licensing and other requests)

Commerce Control List&

Country Chart

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

Contains lists of items subject to licensing authority of BIS

Each entry is called Export Control Classification Number (ECCN)• Five alpha-numeric characters

Items listed in terms of technical parameters

ECCN Structure(Section 738.2)

3A001

Category

Product Group

Reason for Control

Sequential Numbering

Ten Categories in the CCL (0 to 4)

0. Nuclear Materials, Facilities & Equipment and Miscellaneous

1. Materials, Chemicals, Microorganisms & Toxins

2. Materials Processing3. Electronics Design, Development and

Production4. Computers

e.g.: 3A001

Ten Categories in the CCL(5 to 9)

5. Telecommunications (PART 1) and Information Security (PART 2)6. Sensors and Lasers7. Navigation and Avionics8. Marine9. Propulsion Systems, Space Vehicles and

Related Equipment

e.g.: 5A001

ECCN Structure- Product Groups

5A101 5B101 5C101

5D101 5E101

Equipment, assemblies & components

Test, inspection & production equipment

Software Technology

Materials

Finding Your ECCN Check the Commerce

Control List (CCL) alphabetic index

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

Match characteristics of item with ECCN and subparagraph

CCLBIS

Classification Request Requirements (Section 748.3)

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

Identify specific items of concern

Attach Detailed Technical Specifications as a .pdf

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

Contains licensing requirements based on destination and reason for control

Used with the CCL to determine if you need a license

DEGREE OF

CONCERN

REASON FOR

CONTROL

PDFVERSION

E-CFR VERSION******

EASIER TO READ WITH TWO

WINDOWS OPEN

Using the Commerce Control List with the Country Chart

Determine ECCN Check reasons for control Match specific controls to country chart

column• If a territory, possession, or department of a

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

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

EAR99If an item subject to the EAR is NOT

described by any ECCN, it is designated EAR99.

In most cases, the export of an EAR99 item can be completed using the license

authorization NLR (No License Required), but …

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

licensing requirements.

TEN GENERAL PROHIBITIONS

Part 736

DESCRIBE EXPORTS, REEXPORTS AND CONDUCT IN WHICH YOU MAY NOT

ENGAGE WITHOUT A LICENSE, LICENSE EXCEPTION (IF AVAILABLE

AND APPLICABLE) OR A DETERMINATION THAT A LICENSE IS

NOT REQUIRED.

Ten General ProhibitionsPart 736

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

General Prohibitions 4-10 apply to items that are EAR99

FACTORS DETERMININGLICENSE REQUIREMENTS

1. WHAT IS THE PRODUCT?2. WHERE IS THE PRODUCT GOING?3. WHO IS THE END USER?4. WHAT IS THE END-USE?

LICENSE EXCEPTIONS

Part 740

Important ConceptsAfter determining “License Requirements,”

determine if there is an available mechanism for

OVERCOMING

that requirement.

This potential mechanism is called a

License Exception.

License ExceptionsPart 740

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

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

Can You Use a License Exception?

Review general restrictions (Section 740.2)

Identify all applicable License Exception(s)• List based and transaction based• Use least restrictive exception that is

available

Each “X” (license requirement) must be overcome

Strategic Trade Authorization July 2011 through December 2012 105 companies have exported under

STA 1,231 shipments under STA

! 41% (500) exports worth less than $2,500 $146.2 million worth of exports under

STA

Strategic Trade Authorization

Top STA product categories (ECCNs) Optical sighting devices (0A987) Cameras (6A003) Components for the International Space

Station (9A004) Non-fluorinated polymeric substances

(1C008) Electronic components (3A001)

Strategic Trade Authorization

Strategic Trade Authorization: STA (Section 740.20)

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

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

Review ALL individual ECCN entries for additional restrictions.

36 STA-Eligible CountriesMultiple Reasons for Control

NS, CB, NP, RS, CC, SI

NorwayPolandPortugalRomaniaSlovakiaSloveniaSouth KoreaSpainSwedenSwitzerlandTurkeyUnited Kingdom

GermanyGreeceHungaryIcelandIrelandItalyJapanLatviaLithuaniaLuxembourgNetherlandsNew Zealand

ArgentinaAustraliaAustriaBelgium,BulgariaCanadaCroatiaCzech RepublicDenmarkEstoniaFinlandFrance

8 STA-Eligible CountriesReasons for Control

NS ONLY

MaltaSingaporeSouth AfricaTaiwan

AlbaniaHong KongIndiaIsrael

For assistance with Encryption matters please contact the

BIS Encryption Hotline 1-202-482-0707

49

Join us tomorrow as the Journey Continues.