Bureau of Industry and SecurityOverview of the EAR

Richard Sylvestri Lani Tito Aerospace and Defense Industry Commercialization November 19 and 21, 2019

Topics of Discussion

• Scope of the Export Administration Regulations (EAR)

• Determining Export License Requirements

• License Exceptions

• BIS Training Opportunities and Resources

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BIS Online Resources

New to Exporting

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https://youtu.be/Ihy5wPTITOM

Online Training Room

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Exporter Portal

Key Regulatory Agencies

Bureau of Industry and Security (BIS): Most commercial items and defense items not controlled by DDTCwww.bis.doc.gov

Directorate of Defense Trade Controls (DDTC): Critical defense articles and serviceswww.pmddtc.state.gov/

Office of Foreign Assets Controls (OFAC): Economic and Trade Sanctionswww.treasury.gov/resource-center/sanctions

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Directorate of Defense Trade Controls (DDTC)

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• Under the Department of State• Jurisdiction over most defense articles and all defense services• Authority: Arms Export Control Act (AECA)• Regulations: International Traffic in Arms Regulations (ITAR)• List: U.S. Munitions List (USML)• www.pmddtc.state.gov/

Bureau of Industry and Security

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• Under the Department of Commerce• Jurisdiction over most commercial items and those defense

items not controlled by DDTC• Authority: Export Control Reform Act (ECRA)• Regulations: Export Administration Regulations (EAR)• List: Commerce Control List• www.bis.doc.gov

Bureau of Industry and Security

• Mission: Advance U.S. national security, foreign policy, and economic objectives by ensuring an effective export control and treaty compliance system and promoting continued U.S. strategic technology leadership.

• Export Administration Regulations (EAR) – Title 15 CFR Parts 730 to 774

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• Focuses on policy issues• Develops export regulations• Reviews and issues licenses• Commodity Classification Requests• BIS Seminars and Outreach Services

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BIS

Export Administration

Export Enforcement

• Pursues criminal and administrative cases of export violations

• Eight Domestic Field Offices/22 Cities across the United States

• Export Control Officers in Foreign Commercial Service in China, Germany, Hong Kong, India, Singapore, Turkey and the United Arab Emirates

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In 2018, U.S. exports of goods to the world were approximately $1.7 trillion, of which 0.4% was exported under a BIS license

No License Required, 95.5%

BIS License Exceptions, 1.2%

Does everything require a license?

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Determining Jurisdiction is a Critical First Step

• Review ITAR first, then EAR• Flow chart available on the BIS website

Supplement No. 2 to Part 732

Determining Jurisdiction

• Review the U.S. Munitions List (USML)

– Broad categories listing critical defense articles and services– If the item is listed in the USML, it is subject to the

International Traffic in Arms Regulations (ITAR)– If the item is not listed in the USML, ensure that it is not

subject to another agency’s jurisdiction before concluding that it is subject to the EAR.

– Commodity Jurisdiction (CJ) request to DDTC

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Part 732, Supplement 4 to Part 774ITAR: 22 CFR Parts 120-130

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Important EAR Terms

• “Item”• “Export”• “Reexport”• “Subject to the EAR”

15 CFR Part 772, Definitions

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What is an “item”?

Commodity Software Technology

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What is an “export”?

• An export is an actual shipment or transmission of items out of the United States.

• “Release” of technology or source code to a foreign person in the United States

15 CFR Part 734.13

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Shipments to U.S. Territories-Not “Exports” Subject to the EAR

• Shipments within the United States or among the United States and U.S. territories are not “exports” subject to the Export Administration Regulations.– See Schedule C, Classification Codes and Descriptions for an

updated list of U.S. territories– Examples: Puerto Rico, Northern Mariana Islands, U.S. Virgin Islands

15 CFR Part 734.18(a)(4)

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What is a “reexport”?

• A reexport is an actual shipment or transmission of items subject to the EAR from one foreign country to another.

15 CFR Part 734.14

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“Subject to the EAR”

Items on the Commerce Control List and EAR99 items that are:• In the United States

– Including items moving in-transit through the United States

• U.S.-origin items wherever located• Items produced abroad using U.S.-origin content or U.S.-origin

technology• Specific conduct of U.S. and foreign persons

– Proliferation of nuclear explosive devices, chemical or biological weapons, missile technology

– Activities prohibited by any order issued under the EAR

15 CFR Parts 734.3-734.5

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Items not Subject to the EAR

• Items exclusively controlled for export or reexport by another federal agency – Department of State, DDTC – most defense articles and all defense

services– Treasury Department, OFAC – sanctions/embargoes– Nuclear Regulatory Commission – nuclear equipment and material– Department of Energy – nuclear technology– Patent and Trademark Office – patent applications– Department of Defense/State – Foreign Military Sales Program

• Certain publicly available information and “software”

15 CFR Parts Section 734.3(b) and 15 CFR Part 730, Supplement 1

What does it mean to be subject to the EAR?

• “Subject to the EAR” means that the Export Administration Regulations (EAR) are the applicable regulations

• “Subject to the EAR” does not automatically mean that a license is required

• An export or reexport of items “subject to the EAR” requires an authorization, unless designated “No License Required”

• An authorization can be: – A license– A license exception

15 CFR Part 734.2

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Do You Need a License?

**15 CFR Part 732**

What is it?

Where is it going?

Who will receive it?

What is the end use?24

What is it?

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**15 CFR Part 774 Supplement No. 4**Commerce Control List Order of Review

Question: What is the Export Control Classification Number?

How to determine the classification?

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• Self classify– Review Commerce Control List– Order of Review decision tool available on the BIS website

• Obtain classification from manufacturer/supplier– Commodity Classification Information table is available on

the BIS website

• Submit formal request to BIS– On-line submission process

ECCN

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Export Control Classification Number

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Categories

Product Groups

9 A 610 Specific Entries

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Specific Entries

ECCN Acronym Reason for Control

000-099 NS National Security

100-199 MT Missile Technology

200-299 NP Nuclear Nonproliferation

300-399 CB Chemical/Biological Weapons

500-599 Former ITAR-controlled satellites

600-699 Former ITAR-controlled items

900-999 AT/CC/RS/SS/UN

Anti-Terrorism/Crime Control/Regional Stability/Short Supply/UN Sanctions

9A 610

Part 742

600-Series Items

• Export Control Reform• Items in the 600 series xx6xx (e.g., 9A610, 0A604) entries

were formerly on the U.S. Munitions List• As defense articles on the Commerce Control List, these items

have some additional controls

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U.S. Munitions List Commerce Control ListCategory IV - Rockets/Missiles ECCN 9X604 / ECCN 0X604Category V - Explosives/ Energetic Materials ECCN 1X608

Categories VI/XX - Vessels/Submarines ECCN 8X609 / ECCN 8X620

Category VII - Military Vehicles ECCN 0X606Category VIII – Aircraft ECCN 9X610Category IX - Military Training Equipment & Training

ECCN 0X614

Category X - Personal Protective Equipment ECCN 1X613

U.S. Munitions List to 600 Series

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U.S. Munitions List to 600 Series

U.S. Munitions List Commerce Control ListCategory XI - Military Electronics ECCN 3X611 / ECCN 9X620 Category XII – Sensors/Night Vision ECCN 7X611Category XIII - Auxiliary Military Equipment

ECCN 0X617

Category XIV - Toxicological Agents ECCN 1X607 Category XV - Spacecraft Systems ECCN 9X515Category XVI - Nuclear USML Category XVICategory XVIII - Directed Energy Weapons

ECCN 6X619

Category XIX - Gas Turbine Engines ECCN 9X619

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U.S. Munitions List to 600 Series

USML Categories – Proposed RuleCategory I - FirearmsCategory II - Guns and Armament Category III - Ammunition

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EAR99

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Incorporated Items

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• Items incorporated into another generally lose their identity▪ Example: Navigational unit installed into a

civil aircraft

• The EAR does not have a rule equivalent to the ITAR See-Through Rule

Part 770 Interpretations

Exercise 1: Classification

What is the ECCN Category and Product Group?

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Categories

0 Nuclear & Miscellaneous

1 Materials, Chemicals, Microorganisms, & Toxins

2 Materials Processing

3 Electronics

4 Computers

5 Telecommunications & Information Security

6 Sensors & Lasers

7 Navigation & Avionics

8 Marine

9 Aerospace & Propulsion

Product GroupsA Systems, Equipment, &

ComponentsB Test, Inspection, &

Production EquipmentC MaterialsD SoftwareE Technology

Where is it going?Commerce Country Chart

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38https://www.export.gov/csl-search

Who will receive it?

Consolidated Screening List

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Department of Commerce, Bureau of Industry and Security (BIS)

– Denied Persons List– Unverified List– Entity List

Department of State – Arms Export Control Act

Debarred List– Nonproliferation Sanctions

Department of the Treasury, Office of Foreign Assets Control (OFAC)– Specially Designated Nationals List– Foreign Sanctions Evaders List– Sectoral Sanctions Identifications

List– Palestinian Legislative Council List– List of Foreign Financial Institutions

Subject to Part 561– Non-SDN Iranian Sanctions Act List

Examples of End Uses in Part 744

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• Nuclear End-Uses• Rocket Systems & UAVs• Chemical and Biological

Weapons• Activities of U.S. Persons• Maritime Nuclear

Propulsion

• Military End Use/End User Restrictions Certain Cameras Certain Microprocessors China, Russia, and

Venezuela• Organizations, entities, and

individuals on certain Government lists

What is the End Use?

Exercise 2 –License Determination

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What is it? 9A619

Where is it going?

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Do you need a license?

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Based on ITEM and DESTINATON……

**Still need to review END USER and END USE**

Now What?

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If there is a license requirement, the exporter has TWO options:Apply for a license via SNAP-R (BIS Web Portal)Determine if eligible for License Exception

Applying for a License

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• Licenses are valid for four years− You can apply for a license that will cover multiple

shipments over a 4 year period− You may submit a reasonable estimate of items to be

shipped throughout the validity of the license− You do not need a purchase order to apply for a license

• Do not wait until the license you’re using expires before submitting a new application− You may submit a new application prior to the expiration

or full utilization of your current license in order to ensure uninterrupted shipping

• There is no cost to register for SNAP-R or apply for export licenses

License Exceptions

Definition: A “license exception” is an authorization described in Part 740 of the EAR that takes the place of a license, fulfilling a license requirement without the need to obtain a license.

In most instances exporter does not require anything in writing from BIS

Identified by a three letter acronym (e.g. LVS, TSR, STA)

If more than one license exception is available, use the least restrictive license exception

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Country Groups

Supplement No. 1 to Part 740

Country Group A – Regime MembersCountry Group B – Less Restricted CountriesCountry Group C – ReservedCountry Group D – Countries with ConcernsCountry Group E – Embargoed/Terrorist Countries

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License Exceptions

Part 740.2 – Restrictions on ALL License Exceptions

Restrictions on certain ECCNs, reasons for control, and destinations

Denial Orders

Support of Proliferation Activities

Violate any Orders, Terms, or Conditions

Hong Kong recordkeeping requirement

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List-Based: Availability for use is specified in

the Commerce Control List

Transaction-Based: Availability for use is based on the specific transaction

(Item + Destination + End User + End Use)

APP - High Performance ComputersCIV - Civil End-UseGBS - Group B ShipmentsLVS - Limited Value ShipmentTSR - Technology & Software

Under Restriction

AGR - Agricultural CommoditiesAPR - Additional Permissive ReexportsAVS - Aircraft, Vessels, and SpacecraftBAG - Personal BaggageCCD - Consumer Communication DevicesENC - Encryption Commodities, Software, and

TechnologyGFT - Gift Parcels and Humanitarian DonationsGOV - Governments and International OrganizationsRPL - Servicing & Replacement of Parts & EquipmentSCP - Support of the Cuban PeopleSTA - Strategic Trade AuthorizationTMP - Temporary Imports, Exports, Reexports, and

TransfersTSU - Technology & Software Unrestricted

Two Types of License Exceptions

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List-Based License Exceptions

STA – Strategic Trade Authorization

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• Part 740.20 of the EAR• Broad authorization to select countries with export control

systems in place.• Two country tiers, releasing a significant number of items

from license requirement.• Requires a consignee statement acknowledging US export

control requirements prior to export.

STA Eligibility

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• Country Group A:5 destinations and nationals

– Items controlled for NS, CB, NP, RS, CC, or SI reasons

• Country Group A:6 destinations and nationals

– Items controlled for NS reasons only

• Specific requirements for 600-series items

• The ultimate end user must be:– U.S. Government– Armed forces, law enforcement, customs, etc. of a country

in Country Group A:5or

• For development, production, or servicing of an item in Country Group A:5 or the United States that is:

▪ Ultimately to be used by the USG or government of country in Country Group A:5, or

▪ Sent to a person in the United Statesor

• If the U.S. Government has otherwise authorized the ultimate end use. 53

STA and 600-Series Items

• Non-U.S. parties must have been previously approved on a State or Commerce license

• Consignee statement must also address ultimate end user restrictions for 600 series items and agree to end use check

• Eligibility request required for specific end items (0A606.a, 8A609.a, 8A620.a or .b, or 9A610.a)

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STA and 600-Series Items

STA Responsibilities

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Exporter/Reexporter Consignee

1 Provide ECCN(s) to Consignee

2 Provide Consignee Statement to Exporter/Reexporter

3 Obtain Consignee Statement

4 Notify Consignee that shipment (or specific items within a shipment) is (are) under STA

5 Keep records showing whichshipments belong to each Consignee Statement

Maintain Consignee Statement and records pertaining to subsequent reexport or transfer

STA Consignee Statement

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• Aware that items are to be shipped under STA.

• Been informed of ECCN by _________.• No subsequent License Exception APR (a) or

(b) shipments.• Agrees to obtain a consignee statement for

subsequent reexport under STA.• Agrees not to ship or transfer in violation of

EAR.• Agrees to provide documents to U.S.

Government upon request.

• Agrees to end user restrictions• Agrees to permit USG end-use check

[Insert Name and Title of person signing document and date document is signed]

Required for all items eligible under STA

Required for all 600 series items eligible under STA

600 Series Items 9x515 Items Other EAR ItemsUltimate government end use required?

Yes No No

Always limited to Country Group A:5?

Yes Yes No

Eligibility request required?

Yes, for end items in 0A606.a, 8A609.a, 8A620.a or .b, or 9A610.a

Yes, for certain spacecraft in 9A515.a

No

Must the foreign parties have been on a previously approved license?

Yes No No

Does Prior Consignee Statement require agreement to permit USG end-use check?

Yes, if the consignee is not the government of an A:5 country

Yes, if the consignee is not the government of an A:5 country

No

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STA and 600-Series and 9x515

GOV – Governments, International Organizations…

• Intended to facilitate exports or reexports to:– US Government entities

• Government agencies for official use• Military or civilian personnel for personal use

– Other cooperating governments and NATO agencies– Certain international organizations

• IAEA or Euratom (nuclear safeguards programs)• Inspections under the Chemical Weapons Convention• International Space Station

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Section 740.11

Export Clearances

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• Once you’ve determined (and obtained) the proper authorization or designation, you’re ready to ship.

• Electronic Export Information (EEI) filed in Automated Export System (AES)– System administered by U.S. Census Bureau

• Exporter responsible for details on the export, not forwarder• Critical information required

– Classification (ECCN or EAR99)– License Number or License Exception Code

Recent EAR Updates• Restricting Additional Exports and Reexports to Cuba –

10/21/2019

• Updates to the Entity List – 10/9/2019

• Temporary General License Clarifications and Extension –8/21/2019

• Unverified List Updates – 6/27/2019

• Updates via email available from our website60

Questions?

Washington DC202-482-4811

BIS Western Regional OfficeIrvine, CA: 1-949-660-0144

San Jose, CA: 1-408-998-8806

Questions about Red Flags or other potential enforcement problems? BIS Office of Export Enforcement Hotline 1-800-424-2980

https://bis.doc.gov

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